You have an uncle named Rich who wants to teach you about investing in stock. He asks you to invest $10,000 for him, and makes this money available today, February 10, 2021. He has 2 rules: 1. He doesnt want any short-term capital gains, so he asks that you close out the account exactly one year from today. 2. If you make a return of at least 15% on his money, he will give you a bonus equal to 50% of the gain. Youve been watching oil stocks, and decide that Conoco Phillips (COP) has been beat up, and is a bargain at $50 per share, so you buy 200 shares at this price. Well assume that there will be no dividends paid during the year. At the 6 month mark, August 10, 2021, you are excited because the price of COP has risen to $65 per share. If this price holds up for another 6 months, you will earn a generous bonus. You think the stock has room to rise, but at the same time you see the possibility of a dramatic fall. If that happens, the gains youve made would disappear. Youve come up with the following 2 options.

Option 1: Keep things unchanged, and sell the stock 6 months from today a. If on February 10, 2022 the price of COP is $75 per share, what will be the gain/loss, and how much is your bonus?

b. If on February 10, 2022 the price of COP is $50 per share, what will be the gain/loss, and how much is your bonus?

Option 2: Keep the existing stock, but short 100 shares of COP at the current price of $65 per share

c. If on February 10, 2022 the price of COP is $75, and you sell your shares and cover your short, what will be the net gain/loss, and how much is your bonus?

d. If on February 10, 2022 the price of COP is $50, and you sell your shares and cover your short, what will be the net gain/loss, and how much is your bonus?

e. If you want to increase your odds of getting a bonus, should you choose Option 1 or 2?