Question

1. Consider a call option with an exercise price of $35 and an expiration date in December and a put option with an exercise price of $35 and an expiration date also in December, both on a stock that is currently selling for $37 per share. Calculate how much these options are in or out of the money.

2. Suppose that both a call option and a put option have been written on a stock with an exercise price of $40. The current stock price is $42, and the call and put premiums are $3 and $0.75, respectively. Calculate the profit to the long and short positions for both the put and the call with an expiration day stock price of $30 and with a price at expiration of $45.