\documentclass[12pt]{article}
\usepackage{fullpage,amsmath,amsfonts,graphicx}

\begin{document}

\title{Derivatives Lab}
\author{Session 8}
\date{October 10, 2011}
\maketitle

\begin{enumerate}

\item Implement the payoff-functions for a European call option and a
European put option, and plot them for some strike price of your
choice.

\item Find a linear combination of European put and call options which
has the following payoff graph:
\begin{center}
\includegraphics[width=0.6\textwidth]{butterfly.pdf}
\end{center}

\item Implement the binomial tree model via backward induction. 

\item Visualize your simulation using \texttt{imshow}.  Think about an
appropriate color map, how to mask the missing values (Hint: use
Numpy's masked arrays), and how to best map the computed values into
pixel coordinates.

\item Show that an American call option should be exercised at
expiration for maximal profit.

\end{enumerate}


\end{document}

