On the last day of October, you are considering the purchase of 100 shares of A Corporation common stock selling at $37 1/2 per share and also considering an A Corporation option.

Price=35, Calls Dec-3-3/4, Puts Mar-5, Puts Dec-1-1/4, Puts Mar-2

Price=40, Calls Dec-2-1/2, Puts Mar-3-1/2, Puts Dec-4-1/2, Puts Mar-4-3/4

a.If you decide to buy a March call option with an exercise price of 35, what is your dollar gain (loss) if you close your position when the stock is selling at 43 1/2? Why?

b.If you but a December put option with an exercise price of 40, what is the gain/loss if you close position when stock is trading at $33.5? Why?