The premium on a pound put option is $.03 per unit. The exercise price is $1.60. The break-even point is ____ for the buyer of the put, and ____ for the seller of the put. (Assume zero transactions costs and that the buyer and seller of the put option are speculators.)
A) $1.63; $1.63
B) $1.63; $1.60
C) $1.63; $1.57
D) $1.57; $1.63
E) none of the above

Question

Quizplus · Accepted Answer

Break-even point on put option to both the buyer and seller is $1.60 - $.03 = $1.57.

The Premium on a Pound Put Option Is