Q-608.2. Hull explains the following margin requirements for a short position in naked options:

"Writing Naked Options"

A naked option is an option that is not combined with an offsetting position in the underlying stock. The initial and maintenance margin required by the CBOE for a written naked call option is the greater of the following two calculations:

1. A total of 100% of the proceeds of the sale plus 20% of the underlying share price less the amount, if any, by which the option is out of the money
2. A total of 100% of the option proceeds plus 10% of the underlying share price

For a written naked put option, it is the greater of

1. A total of 100% of the proceeds of the sale plus 20% of the underlying share price less the amount, if any, by which the option is out of the money
2. A total of 100% of the option proceeds plus 10% of the exercise price.

The 20% in the preceding calculations is replaced by 15% for options on a broadly based stock index because a stock index is usually less volatile than the price of an individual stock.

Question: A trader writes ten (10) naked put option contracts, with each contract being on 100 shares. The strike price is $50.00 and the stock price is currently $55.00. The option price is $3.40. The time to maturity is six months and the implied volatility is 40.0%. What is the margin requirement?