You have written a call option on Walmart common stock. The option has an exercise price of $75, and Walmarts stock currently trades at $73. The option premium is $1.30 per contract.

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

b. What is your net profit if Walmarts stock price decreases to $71 and stays there until the option expires?

c. What is your net profit on the option if Walmarts stock price increases to $81 at expiration of the option and the option holder exercises the option?