I think jensen is talking about the answer in the Examiner's Report, which also seems a bit strange to me. They hedge at time 1 using the share prices at time 1 but the payoffs at time 2? They also have the same replicating portfolio for the up jump and the down jump.
I think they've tried to be clever and used phi as the value of the shareholding at time 1 (hence divide by 125 to get the number of shares). The examiner's report is wrong tho - where they say phi = 25/9 it should be -1/0.45 = -20/9, which gives the right answer (-0.01778)
