When calculating the downside in an option tree, if the vol = 15%, upside = stock price *1.15, should downside be stock price / 1.15 or stock price * (1 - 0.15)? I think it’s the latter, but the answer use /1.15. Is that wrong?
U = 1/D… then you need the probabilities which weren’t that close to 50/50… i never checked the answer closely for that question. i.e. just looked at # right/wrong.