Pepsi stock price: $178

Expiration date of options: December 9, 2022 (i.e., 1 month from November 11^th)

Exercise (or strike) price: $180

Call option value: $2.66

Put option value: $5.35

U.S. Treasury annual yield: 3.71%

Question 2

Suppose you currently own Pepsi stock. You wish to do a covered call on Pepsi stock to protect against adverse stock price fluctuations. You use the option data shown above. Sketch a profit graph for this covered call. Briefly discuss the advantages of a covered call over just holding Pepsi stock. No calculations necessary, just discuss.