Chapter 06 · Section 6.1

Breakeven Point

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

The investor breaks even when the market price equals:

• a) the higher exercise price less the net premium.
  No. At any point lower than the low exercise price, the investor will be in a losing position.
  b) the lower exercise price less the net premium.

(Click here for help)