1. You purchased eight General Motors (GM) call-option contracts with a strike price of $28.00 at a cost of $1.75 per option. The option expires today when the value of GM stock is $32.04. Ignoring transaction costs and noting that one contract is for 100 options, what is your total net profit (or loss) on your investment?
2. You wrote five call-option contracts (noting that a contract is for 100 options) on CNO Financial (CNO) stock with a strike price of $17.00 at a price of $3.05 per option. Ignoring transactions costs, what is your total net profit or loss on this investment if the price of CNO is $15.75 on the option expira- tion date? [Hint: An option’s “writer” is the counterparty to the option’s buyer.]