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Replication in the multi-period binomial model

A three -period model

Lookback Option

Lookback Option part 2

Actual question of hedging a short position in Lookback Option

SOLUTION

I got the correct answer using this formula

$X_2(HH)=(1+r)*[X_1(H)-\Delta_1(H)*S_1(H)]+\Delta_1(H)*S_2(HH)$

$(1+0.25)[2.24-(.06667*8)]+0.06667*16=3.20$

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