30. Option payoffs (S21-1) Some years ago the Australian firm Bond Corporation sold a share in some land that it owned near Rome for A$110 million and as a result boosted its annual earnings by A$74 million. A television program subsequently revealed that the buyer was given a put option to sell its share in the land back to Bond for A$110 million and that Bond had paid A$20 million for a call option to repurchase the share in the land for the same price.

a. What happens if the land is worth more than A$110 million when the options expire?

What if it is worth less than A$110 million?