Chapter 02 · Section 2.1
Price of the underlying asset
Shawn is the holder of a call option, i.e. he is long a call option. It is a Ford Dec 30 call and the premium he paid was $ 2 per share.
At which price of the underlying asset is Shawn's break-even point?
a) $ 28
b) $ 30
c) $ 32
The option costs $ 2 per share. If he makes a $ 2 profit on the option he breaks even.