Selected Option Quotations for XYZ Corp (use in questions 4-7)

XYZ -Call- -Put- Date of

Price Strike Expiration Volume Price Volume Price Quotation

43.15 45.00 Dec 2020 9923 1.89 2632 3.52 9/15/2020

43.15 45.00 Mar 2021 307 3.04 108 4.45 9/15/2020

43.15 50.00 Dec 2020 4578 0.64 1875 7.24 9/15/2020

43.15 50.00 Mar 2021 212 1.53 76 7.88 9/15/2020

46.20 45.00 Dec 2020 1282 2.29 1279 1.02 11/15/2020

46.20 45.00 Mar 2021 3645 3.94 2856 2.44 11/15/2020

46.20 50.00 Dec 2020 468 0.42 156 4.14 11/15/2020

46.20 50.00 Mar 2021 3645 1.86 1874 5.33 11/15/2020

1. Suppose that it is 9/15/2020 and that you own 400 shares of XYZs common stock. You do not believe that XYZs common stock will perform all that well so you are considering writing a covered call using the December 2020, X = 45 call option. Explain your potential gains and losses (in dollar terms) from following this strategy.