The Table on the next page shows that recent prices for AAPL options traded 23Oct20. The data are for Puts and Calls' prices with the headings as shown. The share price was $115 and the Options Expire on T=15Jan21. Use the "last" column for the calls and puts respectively. (The other columns are Change, %Change, Volume and Open Interest to the RIGHT of the "last" column.

a. Draw the Terminal Value Diagram for Jack, an investor who already has an open purchase position in K=110 and an open sale position in K=120 calls for 5 contracts each; and a P/L diagram for his friend Jill who is considering doing the same with one contract each. (i) At what share prices will Jill break even and what is her maximum profit? These are American Options - (ii) should Jill have to put up margin, she wonders, allowing as how she might be obliged to perform if the K=12o options are exercised against her? Explain your answer.

b. (Q independent pf part a) Draw the TV diagram for Jack he was to separately consider the open sale of the K=120 put and the purchase of the K=110 put, for one contract each. (i) What would be his initial cash flow and his actions and (ii) ensuing cash flow if the K=120 put was exercised against him prematurely (ie prior to T)? [Hint: here and in part a consider the totality of Jack's and Jill's positions!] And... (iii) compare Jack's TV here and in part a.