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

Jason breaks even when the market price of the stock is equal to the strike price minus the cost of the put. Therefore, $15 (strike price) - $1 (cost per share of the put, since $100 for 100 shares) = $14.

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