1.You try to price the call option on XYZ corp. The current stock price of XYZ is $100/share. The risk-free rate is 3%. What is the appropriate price of the 1 year call option of XYZ corp with a strike price of $110 using replicating portfolio approach? You project the stock price of XYZ will either be $100 or $140 in a year. Assume you can borrow or lend money at risk-free rate.

2.You are looking at a call option on IBM with strike price of $155 selling at $3.75 and a put option with strike price of $155 selling at $4.84 (real-time market data on May 7, 2017). Both options will expire on Jul. 21, 2017. What option trading strategy you can employ based on the above two options so you could exploit the possible highly volatile IBM stock price movement in the next three months? Plot the trading strategy profit diagram and point out in what price range your trading strategy will see a profit.

3.

You entered into a long position in 2 corn futures contracts. Each contract size is 5,000 bushels. The initial margin is $4000 in total, and the maintenance margin is $3000 in total. The contract was entered into on June 13, 2012 and closed out on June 17, 2012. Finish the following table:

Date	Future's Price	Daily Gain (Loss)	Cumulative Gain (Loss)	Margin Account Balance	Margin Call ($)
	4.00
Jan. 13	3.97
Jan. 14	4.06
Jan. 15	3.92
Jan. 16	3.88
Jan. 17	3.85