1 A. Suppose a stock is priced at $50. You are bullish on the stock and are considering buying March calls with an exercise price of $45 and $55, respectively. The 45 call is priced at $8.50 and the 55 call is quoted at $2.75. What should you consider in deciding which to purchase if you do not plan on exercising prior to maturity? Be specific.

1 B. Buying an "at-the-money" call option and writing an "at-the-money" put option are two ways to make money when prices rise. When would each be the preferable strategy?