You have taken a long position in a call option on IBM common stock. The option has an exercise price of $143 and IBM's stock currently trades at $145. The option premium is $5 per contract.
a. How much of the option premium is due to intrinsic value versus time value? Option Premium Intrinsic value $ Time value
b. What is your net profit on the option if IBM’s stock price increases to $155 at expiration of the option and you exercise the option? (Negative amount should be indicated by a minus sign.) Net profit $ per share
c. What is your net profit if IBM’s stock price decreases to $135? (Negative amount should be indicated by a minus sign.) Net profit $ per share.