Tradermath logoBrainteaser - Video Game Company

Video Game Company
Probability
A video game company is launching a new game. There's a 30% chance the game will be a big hit, and a 70% chance it will not gain much popularity. If the game is successful, their stock value will rise to $100 per share. If it's not, the stock value will drop to $20 per share. You have the option (but not the obligation) to buy the company's stock for $50 per share the day after the game's release. What is the fair value of this option?