What is the relationship between the risk of the underlying


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.

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Financial Management: What is the relationship between the risk of the underlying
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