Refer to the stock options on Apple in the Figure 2.9. Suppose you buy a January expiration call option with exercise price $350.

a-1.

If the stock price in January is $380, will you exercise your call?

	Yes
	No

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

(Click to select)Net lossNet profit

$

a-3.	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

%

b-1.

Would you exercise the call if you had bought the January call with the exercise price $360?

	Yes
	No

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

(Click to select)Net lossNet profit

$

b-3.	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

%

c-1.

What if you had bought a January put with an exercise price of $350 instead? Would you exercise the put at a stock price of $350?

	Yes
	No

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

%

Prices at close July 7, 2011 Apple (AAPL) Underlying stock price: 357.20 Put Call Open Interest Expiration Strike Last Volume Last Volume Open Interest 32874 9711 Jul 350 9.00 46311 1.73 15148 6421 4457 8.95 5883 24232 Aug 16.50 350 1732 138 8526 16.70 Oct 24.90 751 350 8067 316 25.35 30028 33.95 859 350 Jan 1061 0.90 18762 40395 43911 5.60 Jul 355 3146 11.10 2859 8952 4624 13.70 355 Aug 938 176 2146 18.85 760 21.98 355 Oct 1279 175 27.45 2842 383 31.27 355 Jan 114 3811 3.50 50184 43485 3.15 360 Jul 1176 1864 13.55 43183 8692 11.15 360 Aug 868 134 21.34 4669 693 19.41 360 Oct 1564 305 29.98 14117 1018 28.50 360 Jan