You buy one Loews 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
A) $52.
B) $60.
C) $68.
D) either $52 or $68.
E) None of the options are correct.

Question

Quizplus · Accepted Answer

To break even on a straddle (buying a call and a put with the same strike price and expiration), the stock price must move enough to cover the total cost of the premiums. The total cost is $5 (call) + $3 (put) = $8. Therefore, the stock must either rise to $68 ($60 + $8) or fall to $52 ($60 - $8) to break even.

You Buy One Loews June 60 Call Contract and One