Consider a stock paying continuous dividends of 1%. Assume r = 0.04, = 0.25 and todays stock price of S₀ = 30. You sell 100 Calls with strike K = 30 and expiration in 68 days (assume 365 days in a year). You also construct a delta-hedge to manage your risk.

If tomorrow (1 day later) stock price rises to $31.00, find your net profit/loss from your hedged portfolio. Hint: dont forget about dividends!

Repeat this problem for the case of selling 100 Puts with strike K = 30 and all other parameters staying the same.