At the beginning of November 2017, Olivia Labelle invested her savings in 20 American call option contracts on shares of common stock of Bank of Nova Scotia (BNS) with a call price (Co) of $4.00 per-share, an exercise (strike) price (E) of $78 and expiry on 17-Jan-2020.

Assume on March 16, 2018, Olivia needed money urgently to pay medical bills of $10,000. The only alternative was getting the money from her investment on option contracts. Given this information answer the following questions:

1. If Olivia had exercised her call options, was she able to cover her medical expenses based on the quotations reported on slides 26/27?

2. Was there a better alternative to maximize her revenues? If she had chosen this alternative, was she able to cover her medical bills?

TABLE 23.1 Options Quotations: Friday, March 16, 2018 BNS-Bank of Nova Scotia (The) Last update: March 16, 2018, at 11:05 am (Data 15 minutes delayed) Last price: 82.600; Net change: 0.500; Bid price: 82.600; Ask price: 82.610; 30-day historical volatility: 13.41% Calls Puts Bid price Ask price Last price Impl. vol. Open int. Vol. Strike Bid price Ask price Last price Open interest: 34,446 Volume: 4,052 Open interest: 23,641 20-Apr-18 20-Apr-18 20-Apr-18 22.55 16.6 10.6 22.65 16.7 10.7 22.2 16. 2 10. 2 61.70% 4 5.80% 3 1.40% 5 35 55 0 0 0 0 0 0 0 60 66 72 64 70 20-Apr-18 20-Apr-18 20-Apr-18 18-May-18 18-May-18 0.01 0.04 0.07 0.09 0.14 0.11 0.09 0.12 0.14 0.1 0.15 18-May-18 18.6 18.7 18.2 42.80% 0.15 0.1 18-May-18 12.6 12.7 12.2 30.70% 0.18 0.21 18-May-18 6.65 6.75 6.3 18.90% 0 0 76 18-May-18 0.36 0.39 0.49 19-Oct-18 21.6 22.75 22.25 33.70% 0.64 0.42 19-Oct-18 15.65 17 16.25 26.40% 0.68 19-Oct-18 9.85 10.9 10.45 18.40% 0 0 0 217 122 0 0 0 2 0 60 66 72 78 84 19-Oct-18 19-Oct-18 19-Oct-18 17-Jan-20 17-Jan-20 0.14 0.03 0.31 5.3 8.5 1.24 1.34 1.42 6.9 10.75 17-Jan-20 5.75 8.95 7.8 16.60% 15.20% 7.05 10 17-Jan-20 3.75 4.95 4.8 17-Jan-20 2.21 3.25 3.25 14.00% 89 0 88 17-Jan-209 .15 12.15 12.35