Seth Harris is an avid investor who likes to speculate on stock price changes. Lately he's become bored with the slow movement of most stock prices and thinks options might be more exciting. He has been following the stock of Chelsea Club Inc., a women's apparel manufacturer. Chelsea's stock price has been stable for more than a year, but Seth is convinced it will increase in the near future but probably not rapidly.

Amanda Johnson owns 1,200 shares of Chelsea Club, purchased a year ago at $37. She thinks the stock's price will continue indefinitely in the upper $30s and may even fall a little. Her broker has recommended writing options as a source of income on stagnant stocks.

Chelsea sells for $38.5, and six-month call options at a $36.5 strike price sell for $4.5.

This morning Amanda wrote call options on her 1,200 shares which Seth bought through an options exchange. At the time of that transaction: (Round your answers to two decimal places, if required.

• What is the most Seth can make or lose? Use a minus sign to indicate loss, if any. $ ---------
• What is the most Amanda can make or lose? Use a minus sign to indicate loss, if any. $--------.

  Almost six months later, Chelsea sells for $44, Amanda's options are about to expire, and Seth exercises. Round your answers to two decimal places, if required.

  7. What is Seth's profit or loss? Use a minus sign to indicate loss, if any. $ --------.
  8. What is Amanda's profit or loss? Use a minus sign to indicate loss, if any. $ --------.
  9. If so, how much is it? Use a minus sign to indicate loss, if any. $ ------.
  10. What would Amanda's profit or loss have been if her call had been written naked? Use a minus sign to indicate loss, if any. $ ...........

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