Options have a unique set of terminology. Define the following terms:

(1) Call option;

(2) Put option;

(3) Strike price;

(4) Expiration date;

(5) Exercise value

(6) Option price;

(7) Time value;

(8) Covered option;

(9) Naked option;

(10) In-the-money call;

(11) Out-of-the-money call; and

(12) LEAPS.

Assume that you have just been hired as a financial analyst by Triple Play Inc., a mid-sized California company that specializes in creating high-fashion clothing. Since no one at Triple Play is familiar with the basics of financial options, you have been asked to prepare a brief report that the firm's executives could use to gain at least a cursory understanding of the topic. To begin, you gathered some outside materials the subject and used these materials to draft a list of pertinent questions that need to be answered. In fact, one possible approach to the paper is to use a question-and-answer format. Now that the questions have been drafted, you have to develop the answers.