Series 7 - General Securities Representative Exam

Preview Mode

Jung paid $3.30 for a January 60/70 Call Spread in YZA stock. YZA is currently trading at $58.42. What is Jung's breakeven at expiration?

YZA must be above $73.30
A
YZA must be above $66.70
B
YZA must be above $63.30
C
YZA must be above $56.70
D

Explanations

Jung paid for the spread. She bought the 60 call and sold the 70 call for a debit of $3.30. To breakeven, the stock must be above the lower strike price of 60 + the amount of premium paid 3.30 = $63.30