A stock that is currently selling for $47 has the following six-month options outstanding:

Strike Price

Market Price

Call option

$45

$4

Call option

50

1

a) Which option(s) is (are) in the money?

b) What is the time premium paid for each option?

c) What is the profit (loss) at expiration given different prices of the stock$30, $35, $40, $45, $50, $55, and $60if the investor buys the call with the $45 strike price?

d) What is the profit (loss) at expiration given different prices of the stock$30, $35, $40, $45, $50, $55, and $60if the investor buys the call with the $50 strike price? Compare your answers to (c) and (d).

e) What is the range of stock prices that will generate a profit if the investor buys the stock and sells the call with the $50 strike price?

f) What is the range of stock prices that will generate a profit if the investor buys the stock and sells the call with the $45 strike price? Compare your answers to (e) and (f).

Please provide manual explanation. Thank you!