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Multi-period Binomial Model You are interested in purchasing a straddle on TSLA stock but aren't...

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Multi-period Binomial Model You are interested in purchasing a straddle on TSLA stock but aren't sure which strike price is the best value. Assume that today's stock price S0 is 1000 , and you can model TSLA shares with a 3-period binomial model with the following characteristics: - At esch time interval, the stock can go up by a factor of 1.25 or down by a factor of 0.95 . - The interest rate is 1% per period. - You can choose either the strike of 990 or 1100 (hut you have to buy a call and put at the same strike) Question X.1- Draw the price paths for the stock and all 4 options, inchuding at-expiration values for each option. Question X.2- Your friend notices the ending stock values and that 3 of them are above the 1100 strike price on the call. Does this mean the call option is a good deal? Why or why not? Question X.3- What are the breakeven prices for the 900 strike straddle? (At what stock price do you have zero profit or losi)

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