Series 7 practice questionmediumOptions Calculations 9
An investor buys 1 XYZ 40 put at 5. What is the breakeven point at expiration?
- A$45
- B$35✓ Correct answer
- C$5
- D$33
Explanation
Why B — $35
A long put breaks even at the strike price minus the premium paid: 40 - 5 = 35. The put gains intrinsic value as the stock falls below that point.
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