Chapter 06 · Section 6.1

Breakeven Point

Market Outlook   :  VOLATILE
Profit Potential :  practically 
                    unlimited
Loss Potential   :  limited to 
                    the sum of 
                    the premiums
Breakeven Points  :

The breakeven points occur when the market price at expiration equals the exercise price ...

a) ...plus the premium
No. Premiums are paid for both the call and the put. Thus, one simply calculates the breakeven for each, taking into account that two premiums are paid out.
b) ...minus the premium
c) a and b

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