1. What is the relationship between the risk of the underlying stock and the call price? Explain in intuitive terms.
2. If the stock trades for $130, and the expiring put with an exercise price of $145 trades for $18, how would you trade?
3. What is the gamma of a share of stock if the stock price is $55, and a $50 call on the stock is priced at $7 while a $50 put is priced at $4? Explain.