Question

an investor writes an amex major market index 250 call at 13. the market closes that day at $262.34. the investor will break even on his short call if, on the expiration date, the index closes at:

Answer 1

The breakeven point for the investor who wrote an AMEX major market index 250 call at 13 is $263. This is calculated by adding the premium received ($13) to the strike price of the option ($250).

Step-by-step explanation:

The student has asked about breakeven point calculations for a written call option. In option trading, a call option gives the buyer the right, but not the obligation, to buy a specified quantity of an asset at a specified price (strike price) on or before a specified date (expiration date). An investor who writes a call option receives a premium from the buyer of the option. The investor breaks even when the premium received offsets any potential losses incurred from the option being exercised.

To calculate the breakeven point, the premium received from writing the call option is added to the strike price of the option. From the question, the investor writes an AMEX major market index 250 call at 13, which means the premium received is $13 per share, and the strike price is $250. Therefore, the breakeven point on the expiration date would be the strike price plus the premium received.

Breakeven Point = Strike Price + Premium Received
Breakeven Point = $250 + $13
Breakeven Point = $263

Therefore, on the expiration date, the index would need to close at $263 for the investor to break even on his short call.

Answer 2

263

Step-by-step explanation:

250+13