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 $+0\mathrm{.}10$ per $lb.$ If the following options prices are given for sugar $($cents$/$lb$)$: $1)$ calculate the target ceiling price for a strike price of $12\mathrm{.}75$ and strike price of $12\mathrm{.}25,$ and $2)$ discuss the difference in the target ceiling prices. Why are they different?

Call Options $-$ Sugar

Underlying futures price $=12\mathrm{.}68$

Strike Price

$12\mathrm{.}25$

$12\mathrm{.}75$

$13\mathrm{.}25$

Premium

$0\mathrm{.}95$

$0\mathrm{.}66$

$0\mathrm{.}55$