FIGURE $2\mathrm{.}10$ Stock options on Microsoft, October $7,2022$ Microsoft stock price on this day was $\backslash (\backslash$$ $234\mathrm{.}14\backslash )$ Source: Compiled from data downloaded from Yahoo! Finance.

Problem $2-26($Algo$)$

Refer to the stock options on Microsoft in the Figure $2\mathrm{.}10.$ Suppose you buy a October expiration call option on $100$ shares with the excise price of $\backslash (\backslash$$ $240\backslash ).$

Required:

a$-1.$ If the stock price at option expiration is $\backslash (\backslash$$ $246\backslash ),$ will you exercise your call?

Yes

No

a$-2.$ What is the net profit or loss on your position?

Note: Negative value should be indicated by a minus sign.

Answer is complete and correct.

Net profit

a$-3.$ What is the rate of return on your position?

Note: Negative value should be indicated by a minus sign. Round your answer to $2$ decimal places.

Answer is complete and correct.

b$-1.$ Would you exercise the call if you had bought the October call with the exercise price $\backslash (\backslash$$ $235\backslash )?$

$\backslash [$

$\backslash$text $\{$ Yes $\}\backslash$odot

$\backslash ]$

No

b$-2.$ What is the net profit or loss on your position?

Note: Input the amount as a positive value.

Answer is complete and correct.

Net profit

b$-3.$ What is the rate of return on your position?

Note: Negative value should be indicated by a minus sign. Round your answer to $2$ decimal places.

Answer is complete but not entirely correct. c$-1.$ What if you had bought the October put with exercise price $\backslash (\backslash$$ $240\backslash )$ instead? Would you exercise the put at a stock price of $\backslash (\backslash$$ $240\backslash )?$

Yes

No

$\backslash (\backslash$mathrm$\{$c$\}-2\backslash ).$ What is the rate of return on your position?

Note: Negative value should be indicated by a minus sign.

Answer is complete and correct.