Asked by Abbygalle Prusinski on Jun 23, 2024
Verified
An investor purchases a long call at a price of $2.50. The strike price at expiration is $35. If the current stock price is $35.10, what is the break-even point for the investor?
A) $32.50
B) $35
C) $37.50
D) $37.60
Long Call
A long call is an options trading strategy where the investor purchases a call option with the expectation that the underlying stock will increase in value before the option expires.
Strike Price
The fixed price at which the owner of an option can buy (in case of a call option) or sell (in case of a put option) the underlying asset.
Break-Even Point
The financial position at which cost and revenue are equal, resulting in neither profit nor loss.
- Provide an overview of diverse option trading strategies and their respective earnings.
- Evaluate the ramifications of option pricing on the profitability of specific strategies.
Verified Answer
??
Learning Objectives
- Provide an overview of diverse option trading strategies and their respective earnings.
- Evaluate the ramifications of option pricing on the profitability of specific strategies.