Problem 3-7

You purchase 8 call option contracts with a strike price of $70 and a premium of $2.95. Assume the stock price at expiration is $79.12.

1. What is your dollar profit? (Do not round intermediate calculations. Omit the "$" sign in your response.)

Dollar profit $___________________

2. What if the stock price is $65.07? (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Omit the "$" sign in your response.)

If the stock price is $65.07, the call is(pick one: in-the-money or worthless) , so the dollar return is $___________________ .