UPS stock is trading at $164.50 per share. A Euro- pean call option on UPS stock with a strike price of $165 expiring in one month is trading at $4.90.

(a) Is the call option in-the-money, at-the money, or out-of-the-money?

(b) What is the intrinsic value of this call option?

(c) For what range of UPS stock price ST will the call option be exercised?

(d) Suppose, you are bullish on the UPS stock over the next month and you buy this call option at the market price now. For what range of UPSstockpriceST willyoumakeapositiveprot(notpayo)onthis investment at the time of option expiration?

(e) sketch how your profit (not payoff) varies with the underlying share price at the time of option expiration. Please label the numerical values of both vertical and horizontal intercepts.