A speculator can choose between the following two alternatives: Alternative 1. Buy 500 shares of a stock for $40 per share. Alternative 2. Buy 5,000 European call options on the stock with a strike price of $45 for $4 per option. Consider the following statements on the profit or loss on the option's expiration date. I. If the stock price is greater than $45, alternative 2 will be more profitable than alternative 1. II. If the stock price is less than $40, alternative 1 will have a lower loss than alternative 2. Which of the following is correct?

a. Statement I is correct, Statement II is incorrect. b. Both statements are correct. c. Statement I is incorrect, Statement II is correct. d. Both statements are incorrect.