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Mark buys Call and Put options with different strike prices. Please read the following information. Call...

Mark buys Call and Put options with different strike prices. Please read the following information.

Call option premium: $0.02/€

Put option premium: $0.01/€

Call option strike price: $1.15/€

Put option strike price: $1.05/€

Option contract size: €50,000

Break-even points for Mark are _______.

a. None of the above b. $1.02/€ and $1.18/€ c. $1.08/€ and $1.12/€ d. $1.06/€ and $1.16/€

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Answer #1

Option B

Upper Breakeven Point = Strike Price of Long Call + Net Premium Paid=1.15+0.02+0.01=1.18

Lower Breakeven Point = Strike Price of Long Put - Net Premium Paid=1.05-0.02-0.01=1.02

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