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?