Series 7 Exam Question 99: Answer and Explanation
Question: 99
An investor sells 1 XYZ May 30 put for 7. What is the break-even point?
- A. 23
- B. 30
- C. 37
- D. Cannot be determined
Correct Answer: A
Explanation:
A. Certainly, "cannot be determined" is not the answer. Whether buying or selling a put option with no other positions, you can determine the break-even point by subtracting the premium from the strike price:
30 - 7 = 23
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