Melbourne Capital Ltd considers selling European call options on ANZ Bank Ltd for $1.50 per option. The current market price is $17.70 on 28th September 2020, the exercise price is $20, and the...

Melbourne Capital Ltd considers selling European call options on ANZ Bank Ltd for $1.50 per option. The current market price is $17.70 on 28th September 2020, the exercise price is $20, and the maturity of each call option is 6 months.

(i) Under what circumstances does the investor make a profit?

(ii) Under what circumstances will the option be exercised?

(iii) How many call options should the investor sell to raise a total capital of $1,260,000?