Question: Suppose that a trader writes three naked put option contracts, with each contract being on 100 shares of underlying stock. The option price is

Suppose that a trader writes three naked put option contracts, with each

Suppose that a trader writes three naked put option contracts, with each contract being on 100 shares of underlying stock. The option price is $3 on each share, the time to maturity is six months, and the strike price is $60. a. Write out the formula and draw the graph for the trader's profit on each put option on 1 share of stock. (10 marks) b. What is the margin requirement for the trader if the current stock price is $58? (5 marks) How would the answer to (b) change if the trader is buying instead of writing the options? (5 marks) C.

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