You have taken a long position in a call option on IBM common stock. The option has an exercise price of $139 and IBM's stock currently trades at $145. The option premium is $7 per contract. a. How much of the option premium is due to intrinsic value versus time value? b. What is your net profit on the option if IBMs stock price increases to $155 at expiration of the option and you exercise the option? c. What is your net profit if IBMs stock price decreases to $135?

Req A

Req B and C

How much of the option premium is due to intrinsic value versus time value?

	Option Premium
Intrinsic value
Time value

What is your net profit on the option if IBMs stock price increases to $155 at expiration of the option and you exercise the option and if IBMs stock price decreases to $135? (Negative amounts should be indicated by a minus sign.)

b.	Net profit		per share
c.	Net profit		per share