A put and a call have the following terms: Call: strike price $50 expiration date six months Put: strike price $50 expiration date six months The price of the stock is currently $55. The price of the call and put are, respectively, $9 and $1. What will be the profit from buying the call or buying the put if, after six months, the price of the stock is $40, $50, or $60?

It is useful to recall that the call's buyer has the right but not the obligation to buy an underlying asset at strike price at expiration date; while the put's buyer has the right but not the obligation to sell an underlying asset at strike price at expiration date.

Explanation for each circumstances:

*Profit from buying the call with strike price of $50 after six months if:

- The stock price is $40: Do not exercise the call option as investor can buy from the market at $40 instead at the strike price of $50. Thus, investor will recognize a loss of $9 from buying the option.

- The stock price is $50: Market price is equal to strike price, investor will recognize a loss of $9 from buying the option.

- The stock price is $60: $1. Investor buy at strike price $50, sell in the market for $60 to get profit of $10, minus option price of $9, net gain is $1.

* Profit from buying the put with strike price of $50 after six months if:

- The stock price is $40: Investor buy from market at $40, sell through put option at $50, recognized the profit of $10. Net gain will be determined by further deducting of option price $1, to come at $9.

- The stock price is $50: Market price is equal to strike price, investor will recognize a loss of $1 from buying the option.

- The stock price is $60: Investor ignore the option as it can sell at market price of $60 instead of strike price $50. Net loss is option price $1.