1. John Doe recently acquired 500 shares of TECorp at $54.00 per share and has opted to engage in writing covered calls against these holdings. Consequently, he has sold five TECorp calls at the present market price of $4.75. These calls possess a remaining term of three months until expiration and feature a strike price of $57. Additionally, the stock yields a quarterly dividend of $0.50 per share, with the next dividend anticipated in roughly a month. 1. Calculate the total profit that John will realize if the stock ascends to $57 per share by the expiration date of the calls. 2. Analyze the impact on John's profit (and return) in the event that the stock price surpasses $57 per share. 3. Does this covered call position offer any protection (or cushion) against a drop in the price of the stock? Explain.

1. John Doe recently acquired 500 shares of TECorp at $54.00 per share and has opted to engage in writing covered calls against these holdings. Consequently, he has sold five TECorp calls at the present market price of $4.75. These calls possess a remaining term of three months until expiration and feature a strike price of $57. Additionally, the stock yields a quarterly dividend of $0.50 per share, with the next dividend anticipated in roughly a month. 1. Calculate the total profit that John will realize if the stock ascends to $57 per share by the expiration date of the calls. 2. Analyze the impact on John's profit (and return) in the event that the stock price surpasses $57 per share. 3. Does this covered call position offer any protection (or cushion) against a drop in the price of the stock? Explain