Q1. On July 18, 2009 you bought one call option (i.e., long call) traded on ForeverYours stock. The option price is $6 with expiration date of September 18, 2009, and has an exercise price of $20. The current stock price is also $20. (1). Given the range of possible stock prices of ForeverYours, are you going to exercise the call option under each stock price scenario on September 18, 2009? (2 points) (2). Calculate the dollar payoffs of the long call position for each scenario. (2 points) (3). Calculate the dollar amount profits of the long call position for each scenario. (2 points)

Q2. A covered call position entails entering into a long position in stock and writing a call option on the same stock. The purpose of such a position is to finance a portion of the stock purchase from the sale of the call option. In this question, we employ the covered call position by buying 10,000 shares of stocks and writing 10,000 call options on the same stock with strike price of either $90 or $100. Based on the information given in the template, calculate the profits from a covered call strategy using each call option. (4 points)

Information from template:

When exercise price is $90, call price is $2.70

When exercise price is $100, call price is $0.50

Current Stock Price: $80

Number of Shares Purchased: 10,000

Stock Value Range: 50, 60, 70, 80, 90, 100, 110, 120