An at-the-money American call with a strike price of $80 is being sold for $200. Assume that the stock goes up to $84 per share on the day of expiration.

1. a) If you bought the option, what is your return from exercising the call and liq- uidating your stock position? If you did not buy the option, but had bought 100 shares of the stock in the market at $80 per share and then sold them on the options expiration date at $84 per share, what would be your return? Do the two scenarios have equivalent gain/loss?

2. b) If you do not exercise the option, what is your approximate return from selling the call right before expiration?

3. c) Which would you then prefer? Exercise the call or sell the call?