Question

You buy one Home Depot June 60 call contract and one June 60 put contract. The call premium is $5 and the put premium is $3. At expiration, you break even if the stock price is equal to A) $52. B) $60. C) $68. D) either $52 or $68. E) None of the options are correct.

Answer 1

At expiration, you break even if the stock price is equal to E. None of the options are correct.

How to illustrate the break even?

The call price option will be:

= -$60 + $3 + $5

= $68

The put price option will be:

= -$3 + $60 - $5

= $52

Therefore, at expiration, you break even if the stock price increases above $68 or below $52.

In conclusion, the correct option is E.

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