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You own an underlying asset with a purchase price of $44. You can invest in either a long or short position in a forward call
You own an underlying asset with a purchase price of $44. You can invest in either a long or short position in a forward call or put. Details for these 3 contracts are as follows: forward price = $45, call strike price = $55, call premium = $2, put strike price = $35, and put premium = $1. You have entered into a protective put What is the difference between the higher and lower breakeven points for the protective put?
A) $3 B) $13 C) $6 D) There is only a single breakeven point for a protective put; hence, this question cannot be answered.
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