Consider the following  information

Symbol: BMO.TO
Option Type: Call
Exercise Price: $95
Expiration Date: July 14, 2023
Bid: $0.15
Ask: $0.20
 

  Assume the option matures at the expiry date and is a) in the money with a market price 10% above the exercise price, and b) out of the money with a market price 20% below the exercise price. What is the consequence of your initial recommendation? What is the effect for the entity writing the option? What lessons do you draw? 

 

NOTE: Your answer needs to demonstrate analysis, critical thinking and theory.