Chapter 06 · Section 6.1

Breakeven Point

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

The investor breaks even when the market price equals:

b) the higher exercise price less the net premium.
Yes. For the strategy to be profitable, the market price must fall. When the market price falls to the high exercise price less the net premium, the trader breaks even. When the market falls beyond this point, the trader profits. Continue

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