ONLY THE HIGHLIGHTED QUESTIONS PLEASE

Let us once again consider a call option contract for 100 shares of CALC at a $25 strike price. The graph below shows the price of the option contract as a function of the price of CALC shares. Option Price per Underlying Price Change 5 S Option Price 20 21 22 23 25 25 27 28 29 30 Stock Price in hell Call Price - Underlying Movement ii. Recall that the strike price of this option is $25. Based on the graph, which of the following is larger: delta when this option is OTM or delta when this option is ITM? What feature(s) of the graph help you make this determination? iii. Notice that as the stock price increases, the call price starts to approach the "underlying movement" line; this line represents a dollar-for-dollar increase in the price of the underlying shares of CALC. We call this type of behavior an oblique asymptote. What does this asymptote tell us about delta as the option goes deeper "in the money"? Problem 2 The rate of change of delta for an option is called gamma. The following graph shows two curves: one for delta versus the underlying price and the other for gamma versus the underlying price: Gamma vs Call Delta 0.25 1.2 1 0.2 0.8 0.15 0.6 s 0.1 0.4 0.05 0.2 0 20 21 22 23 24 25 26 27 28 29 0 30 Stock Price i. Suppose Plu) is a function that takes the underlying price of CALC shares as an input and gives the premium of the $25 strike call option as an output. How could we represent delta and gamma using calculus notation? In the given graph, which curve represents delta and which curve represents gamma? How can you tell? Explain your answer by referencing specific graphical features