An investor purchases a long call at a price of $2.60. The strike price at expiration is $37. If the current stock price is $37.

Question

snow_tiger [21]

3 years ago

8

An investor purchases a long call at a price of $2.60. The strike price at expiration is $37. If the current stock price is $37.

10, what is the break-even point for the investor?

Business

1 answer:

Arada [10] · Answer 1 · 2022-09-29T22:14:32+03:00

Answer: $39.60

Explanation:

A long call makes a profit when the price of the underlying stock is higher than the strike price and the cost of acquiring the call.

The Break-even point for the investor will be at the point where the underlying stock price will be the same as the strike price plus the cost paid to purchase the call.

Break-even point = Strike price + Price of call

= 37 + 2.60

= $39.60