Assume that you sold a call option on a certain companys shares with a strike price of Nu.950, and a premium of Nu.30 per share.

a) Under what circumstances will you make a profit? When will you make a loss?

b) How much would you lose or gain if market price of the share on expiry of the option is Nu.927.50 per share?

c) Draw the diagram to illustrate your answer.(assume that lot size is 200 shares)