A stock is selling at $90.

Once the price of the stock exceeds $100, the investor would forego any additional gains as the call would be exercised. Therefore the maximum gain to the investor is $10, plus the premium earned, which is $3, making for a maximum gain of $13.

In the event the stock price declines, the investor would lose on his long stock position an amount equal to the decline, less any premium earned. The worst case price for a stock is 0, and in this case the investor would lose his $90 in the stock, offset by $3 in premiums earned (the written call would expire worthless), thereby limiting his total loss to $87.

Choice 'c' is therefore the correct answer.