Chapter 06 · Section 6.1

Breakeven Point

Market Outlook   :  BULLISH                                        
Profit Potential :  limited
Loss Potential   :  limited to 
                    the net premium                      
Breakeven Point  :

The investor breaks even when the market price equals:

a) the lower exercise price plus the net premium.
• b) the higher exercise price plus the net premium.
  No. The investor will be in a profitable position at this point, not merely breaking even.

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