A stock price is currently $30. during each two month period for the next 4 months it will increase by 8% or reduce by 10%. the risk free interest rate is 5%. use a two step tree to calculate the value of a derivative that pays off [max{30 - St, o}]^2. where St is the stock price in four months.
if the derivative is american style, should it be exercised early?
if the derivative is american style, should it be exercised early?