The following information is available regarding call and put options on MSFT.

Exercise Price Call Price Put Price

$185.00 $3.80 $1.53

187.50 2.40 2.54

190.00 1.43 4.02

Current price of MSFT is $187.28

a. Construct a long call position using the call with an exercise price of $187.50. Make sure to graph the position at option expiration showing the maximum loss, maximum profit and stock price break even.

b. Construct a short put position using the put with an exercise price of $185. Make sure to graph the position at option expiration showing the maximum loss, maximum profit and stock price break even.

c. Compute the intrinsic value of the call with an exercise price of $185? What is the time value of the option?

d. Compute the intrinsic value of the call with an exercise price of $190? What is the time value of this option?