A stock is trading at $61. You believe there is a 70% chance the price of the stock will increase by 10% over the next 3 months. You believe there is a 25% chance the stock will drop by 10%, and you think there is only a 5% chance of a major drop in price of 10%. At-the-money 3-month puts are available at a cost of $760 per contract. What is the expected dollar profit for a writer of a naked put at the end of 3 months?

$150

$150

$577.00

$0