Chapter 06 · Section 6.1

Breakeven Point

Market Outlook   :  STABLE
Profit Potential :  limited to 
                    high ex. 
                    low ex. - 
                    net premium
Loss Potential   :  limited if 
                    market falls
                 :  unlimited if 
                    market rises
Breakeven Points :

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

c) ...the low exercise price minus the maximum profit.
No. The low exercise price is not appropriate since the maximum profit occurs at the high exercise price.
d) ...the low exercise price plus the maximum profit.
e) a and b
f) c and d

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