Problem 18: Turn back to table 2.6 below and look at Microsoft options. Suppose you buy a January expiration call option with exercise price at $100.

1. Suppose the stock price in January is $103. Will you exercise your call? What is the profit on your position?
2. What if you had bought the January call with exercise price $95?
3. What if you had bought a January put with exercise price $105?

Expiration Strike Call Put

18-Jan 2019 95 7.65 0.98

18-Jan 2019 100 3.81 2.20

18-Jan 2019 105 1.45 4.79

8-Feb 2019 95 9.50 2.86

8-Feb 2019 100 5.60 3.92

8-Feb 2019 105 3.08 6.35

NOTE-Microsoft stock on this day was $101.51