Chapter 06 · Section 6.1

Breakeven Point

Market Outlook   :  STABLE
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...

c) a and b
Yes. The trader is short two positions and thus, two breakeven points; One for the call (common exercise price plus the premiums paid), and one for the put (common exercise price minus the premiums paid). Continue

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