You think Apples stock is likely to increase from its current price of $100. A call option on Apples stock with an expiration date in 3 months and an exercise price of $100 is selling for $10 per share (or $1,000 per option contract since each contract is for 100 shares). You have $10,000 to invest and are considering three investment strategies:

a) Purchase 100 shares of Apple stock for $10,000

b) Purchase options on 1,000 shares (10 option contracts) for $10,000

c) Purchase options on 100 shares (1 option contract) for $1,000 and invest the remaining

$9,000 in a bank account that will pay 1% interest over the next three months (an interest rate of 4% per year).

How much is each investment worth in three months (on the date the options expire) if Apples stock price is $80, $90, $100, $110, or $120, assuming no dividends? What rate of return do you realize for each trading strategy in each scenario? Which strategy has the highest upside potential? Which strategy has the most risk?