Series 7 practice questionmediumOptions Calculations 35
An investor writes 1 cash-secured XYZ 50 put at 6. What is the breakeven point at expiration?
- A$56
- B$6
- C$50
- D$44✓ Correct answer
Explanation
Why D — $44
A short put breaks even at strike minus premium received. If the stock falls below that point, the writer’s obligation to buy the stock creates losses.
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