Refer to the stock options on Apple in the Figure 2.10. Suppose you buy an October expiration call option with exercise price $100.

a-1. If the stock price in October is $104, will you exercise your call?

a-2. What is the net profit/loss on your position? (Negative amount should be indicated by a minus sign.)

a-3. What is the rate of return on your position? (Round your answer to 2 decimal places.)

b-1. Would you exercise the call if you had bought the October call with the exercise price $95?

b-2. What is the net profit/loss on your position? (Input the amount as a positive value.)

b-3. What is the rate of return on your position? (Round your answer to 2 decimal places.)

c-1. What if you had bought an October put with an exercise price of $100 instead? Would you exercise the put at a stock price of $100?

c-2. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return %

Apple (AAPL) Strike Expiration 95 September 95 October September 100 October 100 105 September October 105 Underlying stock price $101.05 Call Put 6.20 0.21 6.35 0.33 2.20 1.18 1.55 2.62 0.36 4.35 0.66 4.75 FIGURE 2.10 option trading in Apple (AAPL), September 17, 2014 Source: www.cboe.com. September 17, 2014