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Question #7: Option Strategies (12 Points] Juliana just purchased 2000 shares of USA Truck, Inc. (USAK) stock at $7.26, and she has decided to write
Question #7: Option Strategies (12 Points] Juliana just purchased 2000 shares of USA Truck, Inc. (USAK) stock at $7.26, and she has decided to write calls against these stocks. Accordingly, she sells twenty USAK call option contracts for $0.96 each. The expiration date on the calls is 6 months and they carry a strike price of $7.50. (a) What is the option strategy that Juliana has decided to employ? [2 Points) (b) What happens to Juliana's total profit if the price of the stock falls to $6 a share? What happens to Juliana's total profit if the price of the stock rises to $9 a share? What is the maximum total profit that Juliana can achieve with this strategy? [10 Points]
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