Series 7 - General Securities Representative Exam
NOP stock is trading at 50. An investor buys the 45 put and the 55 call at the same time for 8.00. What is the investor's breakeven point at expiration?
The investor bought a strangle; which is buying a call and put at the same time of different strike prices. To calculate the breakeven, subtract the total premium paid from the put and add the total premium paid to the call. The stock must be above 63 OR below 37 at the time of expiration for the investor to breakeven