Question
Consider a stock priced at $31 with put and call options available at exercise prices of 30 and a time to expiration of six months.
Consider a stock priced at $31 with put and call options available at exercise prices of 30 and a time to expiration of six months. The calls are priced at $3.56 and the puts cost $1.15. There are no dividends on the stock and the options are European. What is the breakeven stock price at expiration for the writer of a covered call if the stock price at expiration is $27?
| a. | $31.00 |
| b. | $28.21 |
| c. | $27.44 |
| d. | $31.00 |
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International Financial Management
Authors: Cheol S. Eun, Bruce G.Resnick
6th Edition
71316973, 978-0071316972, 78034655, 978-0078034657
