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.
• b) the lower exercise price less the net premium.
  Yes. The investor achieves his maximum profit, the premium received, when the market price moves up beyond the higher exercise price (both puts are then worthless). Continue

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