Which of these is a successful time to management strategy

a. $1.25 per contract

b. $1.25 per share

c. - $4.75 per share

Explanation:

a. If we compare the intrinsic value versus time value, the option premium would be the same i.e $1.25 per contract.

b. If the stock price decreases to $70 and it stays till the option expires, the net profit would be $1.25 per share because it is less than the exercise price.

c. If the stock price increase to $80 which is more than the exercise price.So, the net profit would be - $4.75 ($74 - $80 + $1.25).