you have purchased a call option contract on Johnson and Johnson common stock. The option has an exercise price of $90 and Johnson and Johnson stock currently trades at $90.43. The option premium is quoted at $2.17 per contract.

1. Calculate your net profit on the option contract if JNJ stock price rises to $94 and you exercise the option.

2. Calculate your net profit on the option contract if JNJ stock price falls to $89.50 and you exercise the option.

3. If J&J stock price falls to $89.50 show that it is more profitable to exercise than not exercise the option you have purchased.