GK
ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Break-even of a Put option occurs when spot price is equal to
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Premium
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Strike price + Premium
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Strike Price - Premium
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None of the above
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Explanation:
Detailed explanation-1: -For a call buyer, the breakeven point is reached when the underlying asset is equal to the strike price plus the premium paid, while the BEP for a put position is reached when the underlying asset is equal to the strike price minus the premium paid.
Detailed explanation-2: -The strike price is the price at which the option holder can buy or sell BTC after the contract is exercised. On the other hand, the breakeven price is the price at which the option buyer receives neither loss nor profit; The strike price is fixed and defined in the option contract.
Detailed explanation-3: -The breakeven on a short put option is calculated by subtracting the premium from the strike price.
There is 1 question to complete.