Given:

In March 2005, a call option on Google stock with Jan 2006 expiration and strike price of 180 was sold for 27. one option contract is equal to 100 shares. Assume you had bought this call.

Required:

1. If Google stock price rises to 220 in Jan 2006, What is your profit or loss?

2. If Google stock price falls to 160 in Jan 2006, What is your profit or loss?

3. If Google stock price stays at 180 in Jan 2006, What is your profit or loss? Create P&L Diagramme?