Final answer:
The breakeven points for written call and put options are calculated by adding and subtracting the received premiums to/from the strike price, respectively. For the calls, the breakeven is $34.50 and for the puts, it is $25.80. The correct answer is B) I and III.
Step-by-step explanation:
The student is asking about the breakeven points for a combination of call and put options written (sold) on the same underlying asset at the same strike price, but with different premiums. The breakeven points for options transactions are the prices at which the gains from the premiums received equal the losses from the options being exercised. To determine these points for the given options:
Write 2 DWQ Apr 30 calls at 2.25: This means that the investor has received a total premium of (2.25 * 2) = $4.50 per share (since each option contract typically represents 100 shares, this would actually equate to a $450 total premium, but since we're looking at per-share amounts we'll stick with $4.50).
Write 2 DWQ Apr 30 puts at 2.10: Similarly, this position generates a total premium of (2.10 * 2) = $4.20 per share, or $420 in total.
The breakeven point for a written call option is calculated by adding the premium received to the strike price. For the calls, this would be 30 + 4.50 = $34.50. The breakeven point for a written put option is found by subtracting the premium received from the strike price. So, for the puts, it would be 30 - 4.20 = $25.80.
Therefore, the correct answer is B) I and III, which corresponds to 25.80 and 34.50 respectively.