1. Option Function: a. What happens if a long call is exercised? Explain. b. What happens if a long put is exercised? Explain. c. What happens if a short call is exercised? Explain. d. What happens if a short put is exercised? Explain. 2. Intrinsic and Extrinsic Value: Look at the following table and compute intrinsic and extrinsic values: UNDERLYING PRICE OPTION PRICE INTRINSIC VALUE EXTRINSIC VALUE Acadia Pharma (ACAD) Netflix Inc. (NFLX) Proctor & Gamble Co. (PG) IBM (BM) Pure Storage Inc. (PSTG) ZScaler, Inc (ZS) zScaler, Inc (ZS) $26.80 18 Apr 2019 25 call $360.31 17 May 2019 380 put $98,97 5 Apr 2019 95 call $138.12 5 Apr 2019 137 put $20.50 17 May 2019 22.5 call $49.68 20 Dec 2019 50 call $49.68 20 Dec 2019 50 put $3.20 $35.85 $4.85 $2.19 $1.05 $9.70 $9.80 3.1 Delta: a. An option is trading at $3.45. If it has a delta of 78, what would the price of the option be if the underlying increases by $.75? What would the price of the option be if the underlying decreases by S.55? b. What type of option is this? Explain your answer. c. With a delta of.78, is this option ITM, ATM or OTM? Explain your answer. 3.2 Delta: a. An option is trading at $5.03. If it has a delta of -56, what would the price of the option be if the underlying increases by $.75? What would the price of the option be if the underlying decreases by S.55? b. What type of option is this? Explain your answer. c. With a delta of -56, is this option ITM, ATM or OTM? Explain your answer. 3.3 Delta: Look at the following chart. Rank the options in terms of moneyness, from deepest ITM to deepest OTM Option Type A Call .89 B Call .12 Put -.75 D Call .16 E Call .35 F Put - 50 Delta mola