Question

You buy one Home Depot June $60 call contract and one June $60 put contract. The call premium is $5 and the put premium is $3. At expiration, you break even if the stock price is equal to

Answer 1

if price increases above $68 or decreases below $52, a profit is realized

Step-by-step explanation:

At expiration, the break even if the stock price is equal to Call is :

-$60 + (-$5) + $3 = $68 (break even)

Put: -$3+ $60 + (-$5) = $52 (break even)

Therefore At expiration, your break even if the stock price is equal to:

if price increases above $68 or decreases below $52, a profit is realized.