Jason purchased a six-month put on ABC stock at a cost of $100. The strike price was $15. At what market price does Jason just break-even on this investment? Ignore transaction costs and taxes.
A) $15
B) $16
C) $14
D) cannot be determined from the information provided

Question

Quizplus · Accepted Answer

To break even, the market price must be equal to the strike price minus the cost of the put. Therefore, $15 - $1 (cost per share, since $100 is for 100 shares) = $14.

Jason Purchased a Six-Month Put on ABC Stock at a Cost