1. Suppose you purchase a call option on 100 shares of XYZ stock for $6 per share. The option has an exercise price of $40 per share and the stock is currently selling for $50 per share. What is your total profit or loss on the option investment?
2. Suppose the option in the previous question is a put rather than a call. All of the values stated are the same for the put option. What is your total profit or loss on the option investment?