Assume that you have shorted a put option (taken a short position) on Abercrombie stock. When you sold (wrote) the put, you received $3.00. The option will expire in three months time. The put option has a strike price of $18.00.

Required: (show your work).

a) Assuming Abercrombie stock is trading at $10.50 in three months, what will your payoff be? b) What will your profit be? (5 points)