Chapter 06 · Section 6.1

Break-even Point

Buy Calls
Market Outlook   :  Bullish
Profit Potential :  unlimited
Loss Potential   :  limited to the 
                    amount of the premium                
Breakeven Point: :

The investor breaks even when the market price equals the exercise price:

a) plus the premium.
Yes. Before the investor can realize a profit, he must recover the premium the he paid for the option. Thus, to realize a profit, the market price must be greater than the strike price by the amount of premium paid.Continue
b) minus the premium.

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