Turn to Figure 2.11 and find the options for Canadian Natural Resources. Suppose you buy a September 22 call option with exercise price of $39, and the stock price at the expiration is $41.

a. Will you exercise your call? What are the profit and rate of return on your position?
b. What, if you had bought the call with exercise price $40 and the stock price turns out to be $39, wou ld be your revised answers?
c. Suppose you had bought a September 22 put with exercise price $42. What would be your answers, if the share price at expiration is $40?

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Last price: 40.180 Call Sep 22, 2017 W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017 W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Net change-0.040 sid price Sep 29, 2017-W Sep 29, 2017-W 3.65 3.15 2.69 1.22 74 29 0.89 0.54 0.28 0.12 0.04 0.01 3.7 3.2 Sep 29, 2017-W 2.75 Data delayed by at least 15 minutes. Open interest: 20.547 Ask price 3.8 3.3 2.79 2.28 1.8 1.35 0.95 0.59 0.34 0.17 0.1 0.1] 3.8 3.35 2.84 CNQ-Canadian Natural Resources Limited. (Last update: September 14, 2017, at 5:30 p.m.) Bid price: 40.180 Ask price: 40.380 Last price 3.8 3.3 2.79 2.28 1.8 1.35 0.95 0.59 0.34 0.17 0.1 0.11 3.8 3.35 2.84 Figure 2.11 Canadian equity option listings: CNQ Source: Canadian Derivatives Exchange: www.m-.ca/accuclar.php Impiled volatility 51.30% 5140% 52.50% 53.40% 55.30% 59.10% 64.50% 6..20% 55.40% 52.80% 52.60% TH 52.60% 51.20% Strike 36.5 37 37.5 38 38.5 39 39.5 40 40.5 41 41.5 42 36.5 37 37.5 Put Sep 22, 2017 W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017.W Sep 22, 2017-W Sep 22, 2017 W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017-W Sep 22, 2017 W Sep 29, 2017 W Sep 29, 2017-W Sep 29, 2017 W 30 Day historical volatility: 19.91% Last price Bid price 0 0 0.01 0.02 0.05 0.09 0.19 0.34 0.59 0.91 1.33 1.79 0.02 0.04 0.06 Ask price 0.11 0.11 0.11 0.11 0.11 0.15 0.23 0.39 0.63 0.97 1.4 1.88 0.1 0.11 0,11 Open interest: 9,047 0.11 0.11 0.11 0.11 0.11 0.15 0.23 0.39 0.63 097 14 188 0.1 0.11 0.11 Implied volatility 51.10% 51.10% 51.80% 52.40% 53.90% 57.30% 63.10% 59.70% 53.70% 50.90% 49.70% *** $1.40% 51.70%