Chapter 9.M, Problem 5E

To determine

Option:

It represents a right; to trade some quantity of a particular underlying, wither you may buy it or sell it.

If an option allows buying a functional stock or share, it is said to be a call option.

If an option allows selling a functional stock or share, it is said to be a put option

Options represent an agreement between a buyer and seller that provides the owner that he can buy or sell the asset but it does not qualify that he necessarily has to do so. It is the decision of the owner.

Comprehensive Income:

Comprehensive income is basically the sum of net income that should be different from income statement because income has not been realized and consists of unrealized profits or losses with various other sources.

To calculate:

The balances at both $30\text{and}60$ days after the inception of both options for investment in options, other comprehensive income, Gain or Loss on options (the change in time value).