Chapter 06 · Section 6.1

Breakeven Point

Write Puts
Market Outlook   :  BULLISH
Profit Potential :  limited to the 
                    premium received
Loss Potential   :  practically 
                    unlimited 
Breakeven Point  :

• a) plus the premium.
  No. A premium is received by the put writer. As the market price decreases, it is moving against his postion. He breaks even when the market price equals the strike price minus the premium, the premium cushioning the downward direction.
  b) minus the premium.

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