Series 7 practice questionmediumOptions Calculations 34
An investor buys 1 XYZ 45 put at 5. What is the breakeven point at expiration?
- A$50
- B$5
- C$40✓ Correct answer
- D$38
Explanation
Why C — $40
A long put breaks even at the strike price minus the premium paid: 45 - 5 = 40. The put gains intrinsic value as the stock falls below that point.
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