Suppose you own 5,000 IBM shares that are worth $25 each. You are worrying about the decrease in stock price over the next 4 months. The call and put option premiums on IBM stock that matures in the next 4 months are the same as $3. The strike prices are $25. Use the covered call as a hedge strategy and compare

with the protective put strategy. For Spot price = $14, $27 and $33,

Compute the payoff from

1. long shares
2. Covered call
3. protective put