M&M Mars is concerned about the price of sugar going up. Indeed, sugar is a major input in producing candy and confections. They want to establish a ceiling price for sugar through the purchase of call options on sugar futures. They anticipate the ending basis at the time they purchase the sugar to be +0.10 per lb. If the following options prices are given for sugar (cents/b): 1) calculate the target ceiling price for a strike price of 12.75 and strike price of 12.25, and 2) discuss the difference in the target ceiling prices. Why are they different? Call Options - Sugar Underlying futures price = 12.68 Strike Price Premium 12.25 0.95 12.75 0.66 13.25 0.55