Problem:
Suppose you believe that Pepsi's stock price is going to increase from its current level of $22.50 sometime during the next 5 months. For $335.70 you can buy a 5-month call option giving you the right to buy 75 shares at a price of $25 per share.
Requirement:
Question: If you buy this option for $335.70 and Pepsi's stock price actually rises to $35, what would your pre-tax net profit be?
Note: Explain in detail.