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William sells 10 CALL option contracts Each contract consists of 100 shares Exercise price $8.00 per share; Premium $1.50; Spot price at expiry $12.50 a)

William sells 10 CALL option contracts

Each contract consists of 100 shares

Exercise price $8.00 per share; Premium $1.50; Spot price at expiry $12.50

a) How much would William earn by selling the 10 contracts (ignoring brokerage costs?

b) Assuming the buyer exercises the options, calculate Williams loss?

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