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You write one JNJ February 70 (strike price) put for a premium of $5. Ignoring transactions costs, what is the break-even price of this position

1 Answer

5 votes

Answer:

$65

Step-by-step explanation:

The computation of the break even price for this position is shown below:

Break even price is

= Strike price - premium

= $70 - $5

= $65

The stock goes upward to $65 so you lose only $5 but it falls than the stock would be $0

Hence, the break even price of this position is $65

Therefore by applying the above formula we can get the break even price and the same is to be considered

User Sly Gryphon
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