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
f) a and c
The trader is long two calls with different exercise prices. Therefore, he may have two breakeven points.