1. Consider an index option. The index is at 425.48, and a two-month call with an exercise price of 425 is priced at $15. You are in the 31 percent tax bracket. Compute the after-tax profit for the following cases. Assume 100 calls.

1. You buy the call. One month later the index is at 428 and the call is at $12. You sell the call.
2. You buy the call and hold it until expiration, whereupon the index is at 441.35. You exercise the call. Assume the long-term capital gains tax rate is 15%.
3. You hold the call until expiration, when the index is at 417.15.
4. How will your answers in parts a and b be affected if the option positions are not closed out by the end of the year?