1. [25 points] The following table provided CALL and PUT options for Apple Inc. (AAPL) stock, which ended trading at US$1203 (-$0.93; -0.76%) on March 12, 2021 (at 4:00PM EST; at close). According to the listing, the options are going to expire on April 16, 2021 (i.e., it expires in 35 days). One option contract is equivalent to 100 shares.

CALL
	Option Price
Strike	Last Price	Bid	Ask	Change	% Change	Volume	Open Interest	Implied Volatility
85	35.25	36.2	36.35	-1.85	-4.99%	1	939	62.70%
90	31.25	31.25	31.4	-1.03	-3.19%	10	1,944	55.76%
95	26.15	26.35	26.55	0.25	0.97%	1	601	50.73%
100	21.4	21.55	21.7	-1.1	-4.89%	79	4,566	46.95%
120	5.59	5.55	5.7	-0.61	-9.84%	14,763	79,844	35.24%
125	3.35	3.35	3.4	-0.44	-11.61%	6,240	72,491	34.35%
150	0.28	0.28	0.29	-0.03	-9.68%	1,274	48,878	40.82%
PUT
Strike	Last Price	Bid	Ask	Change	% Change	Volume	Open Interest	Implied Volatility
85	0.18	0.16	0.18	0	-	32	2,732	58.98%
90	0.24	0.23	0.25	-0.02	-7.69%	16	5,063	53.71%
95	0.37	0.31	0.36	0	-	93	6,651	49.12%
100	0.52	0.52	0.54	-0.01	-1.89%	423	13,718	44.48%
110	1.5	1.47	1.5	0.11	7.91%	1,753	19,349	37.60%
120	4.55	4.5	4.55	0.4	9.64%	17,619	89,396	34.42%
125	7.28	7.2	7.3	0.53	7.85%	580	56,787	33.86%
130	10.95	10.7	10.85	0.78	7.67%	719	31,335	33.90%
140	19.97	19.45	19.6	1.45	7.83%	5,095	90,098	36.23%
150	29.25	29.1	29.25	1.09	3.87%	364	4,639	40.58%

Source: AAPL 121.03 -0.93 -0.76% : Apple Inc. - Yahoo Finance; NasdaqGS Real Time Price

1. Suppose you purchased the $125 CALL option contract written by one of your classmates.
   1. What right does the option give you? At what cost per contract? What is the intrinsic value per contract of this option on March 12? What is the time value per contract of the option on March 12?
   2. What will happen if the price of Apple Inc. stock rises to $150 per share before April 16 and you decide to exercise your option?
   3. Will you make a profit or a loss when the stock price is $150? How much?
   4. Draw a diagram to show the pattern of profits or losses per share for your call option position.