Calculating Pay–offs Use the option quote information on Ageas from Euronext Liffe shown here to answer the questions that follow. Assume lot size per contract is 100 shares.

(a) Suppose you buy 10 contracts of the June €1.50 call option. How much will you pay, ignoring commissions?

(b) In part (a), suppose that Ageas equity is selling for €1.70 per share on the expiration date. How much is your options investment worth? What if the terminal share price is €1.35? Explain.

(c) Suppose you buy 10 contracts of the June €1.20 put option. What is your maximum gain? On the expiration date, Ageas is selling for €1.14 per share. How much is your options investment worth? What is your net gain?

(d) In part (c), suppose you sell 10 of the June €1.20 put contracts. What is your net gain or loss if Ageas is selling for €1.14 at expiration? For €1.32? What is the break-even price – that is, the terminal share price that results in a zero profit?