SIE practice questionhardStraddles
What is the breakeven point(s) for a long straddle with a $40 strike if each option is bought for $3?
- A$46 and $34✓ Correct answer
- B$43 and $37
- C$40
- D$36 and $44
Explanation
Why A — $46 and $34
Breakeven is strike plus premium and strike minus premium ($40+$6, $40-$6), but since each is $3, total premium is $6, so $40+$6=$46 and $40-$6=$34. B and D use incorrect premium or math.
Turn it into reps
Reading one answer is not the same as being ready
Lucky the Banker is a free practice app with 1,867+ SIE questions, weak-area tracking, and timed mock exams. No credit card, no paywall.
Spot an error in this question or explanation? Tell us — we fix these fast.
Related Options questions
- If an option expires in the money but is not exercised, what happens?
- A bear call spread’s maximum loss occurs if:
- Which Greek increases as an option moves deeper in the money?
- The maximum gain in a debit put spread is calculated as:
- Which option will have the greatest time value, all else equal?
- A trader simultaneously buys a March 50 call at $7 and sells a March 55 call at $3. What's the maximum profit per share?
- A long put with a $25 strike is purchased for $2. What is the maximum gain per share?
- An investor expects high volatility but is unsure of direction. Which is the most appropriate options strategy?