Sally purchased a call option on Treasury bond futures at a premium of 2-00. The exercise price is 92-08. Assume that the price of the Treasury bond futures rises to 95-08. Note that prices are quoted in 1/64th of a point.

Question 1: If Sally exercises her call option and also sells an identical futures contract at 95-08 to close out her position, what is her net gain or loss after accounting for the premium paid on the option?

Question 2: What is Sallys net gain or loss if she lets the option expire? Explain.