Gilead Sciences, Inc. $($GILD$)$ is trading at $$106.$ Instead of spending $$53,000$ for

$500$ shares of GILD stock, an investor could purchase a five$-$month call with a

$$110-$strike price for $$8\mathrm{.}23.$ By doing this, the investor is saying that he or she

anticipates that GILD will rise above the strike of $$110($which is where GILD

can be purchased no matter how high GILD has risen$),$ plus another $$8($the option

premium$),$ or $$118$ by expiration. Without considering commissions and taxes, discuss the amount of risk presented in each of the following scenarios, as opposed to

purchasing $500$ shares:

$$ GILD is trading at or above $$118$ by expiration.

$$ GILD is trading between $$100$ and $$118$ at expiration.

$$ GILD is trading at or below $$100$ at expiration.