On February 10, 2015, Gail purchases 20 calls on Red Corporation for $250 per call. Each call represents an option to buy 100 shares of Red stock at $42 per share any time before November 25, 2015. Compute the gain or loss recognized, and determine whether the gain or loss is long-term or short-term for Gail in the following situations:
a. The 20 calls are sold on May 15, 2015, for $310 per call.
b. The calls are not exercised but allowed to expire.
c. The calls are exercised on July 15, 2015, and the 2,000 shares of Red Corporation stock are sold on July 20, 2016, for $50 per share.