You purchased 5 put option contracts on Mountain Builders stock at an option premium of $.70. The strike price is $30. What is your break-even stock price?
A)$19.90
B)$24.35
C)$25.00
D)$29.30
E)$30.70

Question

Quizplus · Accepted Answer

The break-even stock price for a put option is calculated as follows: 
Break-even price = Strike price - Option premium 
= $30 - ($.70 x 100 shares per contract x 5 contracts) 
= $30 - $350 
= $29.30

You Purchased 5 Put Option Contracts on Mountain Builders Stock