Consider the following positions on the Intel stock. For each of the positions choose the strike X = $27.5. Choose December option.

a. Long 1 call contract.

b. Short 1 put.

c. Long 1 call + short 1 put.

d. Long 1 call + long 1 put.

e. Long 1 call with strike $27.5 and short 1 call with strike $30.

Assume that you enter and close the positions at the mid point of bid-ask spread.

Assume that you trade each contract on November 1 (i.e. enter the positions). For each position (a-f) answer the following questions:

1. Close out your positions on November 8. Calculate your net dollar gain or loss.

2. Now assume that you exercise options on November 8. For each position compute your net gain or loss.

3. For each position draw the payoff diagram, marking the strikes and the stock price on November 8 clearly, as well as your payoff.

INTC (INTEL CORP) 28.390.13 November 8 INTC (INTEL CORP) 28.56+0.07