You short a call option with an exercise price of $72 and a premium of c=$5. The current stock
price is $75. There are 2 months left until expiration. Graph the option payoff and profit as the
function of the stock price.
a. Is the option ITM?
b. What is your maximum possible gain and loss?
c. What movement in the stock price are you betting on?
d. Would the option premium today be higher or lower than when you entered in the option?
e. If the option gets exercised today, how much is your total profit/loss?
f. What is the option’s intrinsic and time value today, if the option premium is $10?