Chapter 06 · Section 6.1
Breakeven Point
Market Outlook : VOLATILE
Profit Potential: limited on downside;
unlimited on upside
Loss Potential : limited
Breakeven Points:
The calls used in the construction of this backspread are priced as follows:
Long 110 call: $2.75
Short 100 call: $9.25
To which point must the market fall in order to breakeven?
e) -106.25
No. Add the net premium to the low execise price, do not subtract it from the higher exercise price.
a) +103.75
b) -106.50
c) -101.00
d) -96.25
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