Products & RisksQuestion 32 of 125
An investor buys 1 XYZ put with a 40 strike for a premium of 2. What is the breakeven point at expiration?
a.$42
b.$40
c.$44
d.$38
Explanation
For a long put, breakeven equals the strike price minus the premium paid: 40 - 2 = $38. The stock must fall below $38 for the put buyer to earn a net profit after recovering the premium.
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