Chapter 06 · Section 6.1

Breakeven Point

Market Outlook  : STABLE
Profit Potential: limited
Loss Potential  : limited 
Breakeven Points:

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

a) ...the high exercise price minus the premium.
b) ...the high exercise price plus the premium.
c) ...the high exercise price plus the premium.
d) ...the low exercise price plus the premium.
• e) a and d
  Yes. The strategy is profitable when the market price is between the low exercise price plus the net premium and the high exercise price minus the net premium. Continue
  f) a and c

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