Spencer calculates that shares of Tardis Intertemporal, currently trading at $100, will either increase to $200 or decrease to $50 in one year with a 50/50 probability.
Spencer is considering a one year $175.00 call option. The simple interest rate is 10.250%.
The price per share of leveraged stock is $
The hedge ratio is 1/
The price of the call option should be per share.