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The Call graph in Figure 5.2 is for the profits to be made when buying a call option. If the market price of the JPM

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The Call graph in Figure 5.2 is for the profits to be made when buying a call option. If the market price of the JPM stock is $42 at the expiration date of the call with strike price of 38, would the call option be exercised and what will be the loss/gain of the option holder if the call price is $2? NARRBEGIN: Figure 5.2 Profit and Loss of Buying a Call Option on JPMorgan Chase & Co (JPM) and a Put Option on PepsiCo, Inc. (PEP) Profit and Loss of Buying JPM Call 4 Profit/Loss 0 33 34 35 36 37 38 39 40 41 42 43 -2 Stock Price at Call Expiration (S) Profit and Loss of Buying a PEP Put N 0 70 71 72 73 Profit and Loss 74 75 76 77 78 79 80 -2 Stock Prices at Put Expiration (S) NARREND a the call will be exercised and the holder will make $4 gain b the call will not be exercised and the holder will not lose anything the call will be exercised and the holder will gain $2. d the call will not be exercised and the holder will lose and cost of the call option e none of the above

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