Exhibit 14-1 Holly Kombs, a Speculator, Expects Interest Rates to Decline in Decline

Exhibit 14-1
Holly Kombs, a speculator, expects interest rates to decline in the near future.Thus, she purchases a call option on interest rate futures with an exercise price of 92-10.The premium on the call option is 2-24.Just before the expiration date, the price of Treasury bond futures is 97-14.At this time, Kombs decides to exercise the option and closes out the position by selling an identical futures contract.
-Refer to Exhibit 14-1.Insurers, Inc., an insurance company, sold the call option purchased by Kombs.Insurers' net gain from selling the call option to Kombs is $____.

A) 2,687.50
B) 2,687.50
C) 2,375.00
D) 7,437.50
E) none of the above