At what point on the graph of possible values for a call option does the buyer break even financially?
A) When stock price equals strike price
B) At any point on the upward-sloping segment of the graph
C) When stock price equals cost of the option plus strike price
D) At the point where the graph intercepts the y-axis

Question

Quizplus · Accepted Answer

The buyer of a call option breaks even when the stock price equals the strike price plus the premium paid for the option. This is because the buyer needs the stock price to cover both the strike price and the cost of the option to avoid a financial loss.

At What Point on the Graph of Possible Values for a Call