a. Evanston Insurance Inc. has purchased shares of Stock E at $50 per share. It will sell the stock in six months. It considers using a strategy of covered call writing to partially hedge its position in this stock. The exercise price is $53, the expiration date is six months, and the premium on the call option is $2. Complete the following table.

b. Assume that each of the six stock prices in the table's first column has an equal probability of occurring. Compare the probability distribution of the profits (or losses) per share when using covered call writing versus not using it. Would you recommend covered call writing in this example? Explain.

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Profit or Loss per Share Profit or Loss per Share If a Covered Call Strategy If a Covered Call Strategy Possible Price of Stock E in 6 Months Is Used Is Not Used $47 $50 S52 S55 $57 $60