The current price of a stock is $94, and three-month call options with a strike price of $97 currently sell for $4.70. An investor who feels that the price of the stock will increase is trying to decide between buying 100 shares and buying 2,000 call options. Both strategies involve an investment of $9,400.

a) Illustrate that the potential profit and potential loss are both higher with option trading, by showing what happens if the stock price rises to $115, or falls to $88. b) How high does the stock price have to rise for the option strategy to be more profitable?