Q2. Use call An airline company expects to receive $600,000 net income from ticket fares. To hedge against rising feul costs, the company buys 10 call option contracts of crude oil, at a strike price options to of $45 per barrel and the option costs $3.10 per barrel (1 contract = 1,000 barrels). Draw a chart to compare how the spot price 3 months later, in the range of $35-$55, will affect the lock the company's profit/loss in 1) buying the barrels directly from the market, and 2) using call options to buy the barrels. buying price Answer: Let S be the spot price Profit/loss of buying 10,000 barrels on the market: Profit/loss of exercising the option to buy 10000 barrels and sell in the market: Profit/loss in buying Profit/loss in longing directly from the call options to buy the Spot Price market barrels $35 $36 $37 $38 $39 $40 $41 $42 $43 $44 $45 $46. $47 $48 $49 $50 $51 $52 $53 $54 $551