1. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at end of holding period Profit (in dollars) BUY STOCK BUY STOCK DEC; S = $164 BE = $164 AT P = $180, = ($1600)

2. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at end of holding period Profit (in dollars) DEC; S = $164 BE = $164 AT P = $180, SELL STOCK SHORT =( $1600)

3. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) BUY CALL DEC; S = $165, C = $5.75 BE = $164 + $5.75 = $170.75 AT P = $180, = $925 Maximum Loss = $575

4. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) BUY CALL: DIFFERENT EXERCISE PRICES 165 170 160 A higher strike price results in smaller gains on the upside but smaller losses on the downside DEC JULY 160, 165, 170

5. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) SELL CALL Maximum profit = $575 DEC JULY 165 BE = $170.75 AT P = $180, = ($925) Maximum loss = infinity

6. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) SELL CALL DIFFERENT EXERCISE PRICES DEC JULY 160, 165,170 160 165 170 A higher strike price results in smaller gains on the downside but smaller losses on the upside

7. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) BUY PUT DEC JULY 165 P = $6 BE = $159 AT P = $150, = ($900) MAXIMUM PROFIT = $1599 MAXIMUM LOSS = $600

8. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) BUY PUT: DIFFERENT EXERCISE PRICES DEC JULY 160,165 170 A lower strike price results in smaller gains on the downside but smaller losses on the upside 160 165 170

9. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) SELL PUT DEC JULY 165 P = $6 BE = $159 AT P = $150, = ($900) MAXIMUM PROFIT = $600 MAXIMUM LOSS = $15,900

10. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) SELL PUT: DIFFERENT EXERCISE PRICES DEC JULY 160,165,170 165 160 170

11. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) COVERED CALL DEC JULY 165 C= $5.75 S = $164 BE = $158.25 MAXIMUM PROFIT = $675 MAXIMUM LOSS = $15,825 (BUY STOCK)

12. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) COVERED CALL: DIFFERENT EXERCISE PRICES DEC JULY 160,165,170 165 160 170 A lower strike price offers the most downside protection but at the expense of more of the upside gain

13. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) PROTECTIVE PUT Maximum Loss = $500 DEC JULY 165; P =$6; S = $164 Breakeven = $170 Maximum profit = infinity

14. OPTIONS 140150160180170190 0 500 1000 1500 2000 2500 -500 -1500 -2000 -1000 Stock price at expiration Profit (in dollars) PROTECTIVE PUT; DIFFERENT EXERCISE PRICES DEC JULY 165, 165, 170 A higher strike price offers the most downside protection but at the expense of more of the upside gain 160 165 170