Series 7 practice questionmediumOptions Calculations 20
An investor writes 1 cash-secured XYZ 55 put at 6. What is the breakeven point at expiration?
- A$49✓ Correct answer
- B$61
- C$6
- D$55
Explanation
Why A — $49
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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