SIE practice questionmediumBreakeven points
For a put spread, how is the breakeven calculated?
- AHigher strike plus net premium paid
- BLower strike plus net premium paid
- CHigher strike minus net premium paid✓ Correct answer
- DLower strike minus net premium paid
Explanation
Why C — Higher strike minus net premium paid
The breakeven for a put spread is found by subtracting net premium from higher strike. The other options confuse the direction of the formula.
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