Chapter 06 · Section 6.1

Breakeven Point

Market Outlook   :  BEARISH
Profit Potential :  practically 
                    unlimited
Loss Potential   :  limited to the 
                    amount of the 
                    premium
Breakeven Point  :

The trader's breakeven point is the exercise price:

b) minus the premium.
Yes. To profit, the market price must be below the exercise price. Since the trader has paid a premium he must recover the premium he paid for the option -- when the market price equals the exercise price less the premium. Continue

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