A stock that is currently selling for $47 has the following 6-month options outs

Question

A stock that is currently selling for $47 has the following 6-month options outstanding: Strike Price Market Price Call Options $45 $4 Call Options 50 1 a) Which option(s) is (are) in the money? b) What is the premium paid for each option? c) What is the profit (loss) at expiration given different prices of the stock- $30, $35, $40, $45, $50, $55, and $60-if the investor buys the call with the $45 strike price? d) What is the profit (loss) at expiration given different prices of the stock-$30, $35, $40, $45, $50, and $60-if the investor buys the call with the $50 strike price. Compare your answers (c) and (d). e) What is the range of stock prices that will generate a profit if the investor buys the stock and sells the call with the $50 strike price? f) What is the range of stock prices that will generate a profit if the investor buys the stock and sells the call with $45 strike price? Compare your answers to (e) and (f).

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