Problem 9.17 (from Textbook)

Consider an exchange-traded call option contract to buy 500 shares with a

strike price of $40 and maturity in four months. Explain how the terms of

the option contract change when there is

(a)

A 10% stock dividend

(b)

A 10% cash dividend

(c)

A 4-for-1 stock split

Problem 9.25 (from Textbook)

A trader writes five naked put option contracts, with each contract being on

100 shares.

The option price is $10, the time to maturity is six months, and the strike

price is $64.

(a) What is the margin requirement if the stock price is $58?

(c) How would the answer to (a) change if the stock price were $70?

(d) How would the answer to (a) change if the trader is buying instead of

selling the

options?