Series 7 practice questionmediumOptions Calculations 4
An investor buys 1 XYZ 55 put at 5. What is the breakeven point at expiration?
- A$50✓ Correct answer
- B$60
- C$5
- D$48
Explanation
Why A — $50
A long put breaks even at the strike price minus the premium paid: 55 - 5 = 50. The put gains intrinsic value as the stock falls below that point.
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