Stock options on Microsoft, September 4, 2019 Expiration 27-September-2019 27-September-2019…

Stock options on Microsoft, September 4, 2019 Expiration 27-September-2019 27-September-2019 27-September-2019 15-November-2019 15-November-2019 15-November-2019 Strike 130 135 140 130 135 140 Call 8.65 4.82 1.99 11.50 8.12 5.32 Put 1.03 2.17 4.35 3.55 5.15 7.40 Note: Microsoft stock price on this day was $137.49. Source: Compiled from data downloaded from Yahoo! Finance. Refer to the stock options on Microsoft in the Figure 2.10. Suppose you buy a September expiration call option on 100 shares with the exercise price of $135. a-1. If the stock price in September is $139, will you exercise your call? O Yes ? ?? a-2. What is the net profit/loss on your position? (Input the amount as a positive value.) Net loss of $ 112 a-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return % b-1. Would you exercise the call if you had bought the September call with the exercise price $130? O Yes O NO b-2. What is the net profit/loss on your position? (Input the amount as a positive value.) of b-3. What is the rate of return on your position? (Negative value should be indicated by a minus sign. Round your answer to 2 decimal places.) Rate of return % C-1. What if you had bought an September put with exercise price $135 instead? Would you exercise the put at a stock price of $135? O Yes ? ?? c-2. What is the rate of return on your position? (Negative value should be indicated by a minus sign.) Rate of return %