1. For questions 1.a and 1.b, i) evaluate the profit/loss of the given option position using the spot prices at expiration provided and ii) determine the break-even price. Remember to consider 100 shares/option contract. a. 1 Long 3M (MMM) 120 call with June expiration, purchased at $2.55/share. Spot @ $110 $120 $130 expiration Profit/Loss $255 Per contract = [-Premium + Max(Spot-Strike,0))*100 @$110/Share = [-$2.55 + Max($110 - $120,$0))*100 = [-$2.55 + $0]*100 =-$255 b. Short 1 Alcoa Inc (AA) 8 put with May expiration, sold for $0.13/share. Evaluate at $7, $7.90, and $10 as the stock price at expiration Spot @ $7.00 $7.90 $10.00 expiration Profit/Loss Per contract = [+Premium - Max(Strike-Spot,0))*100