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12 July, 12:53

A customer buys 100 shares of ABC at $65 and buys 1 ABC Jan 65 Put @ $3. At which market price is the position profitable?

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  1. 12 July, 13:12
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    The correct answer is $68.

    Explanation:

    First, both the $ 3 paid in premiums $ 64 paid for the shares must be recovered by the buyer ($ 3 + $ 64 = $ 67). In the process of selling the shares, a profit margin must be obtained, that is, the shares must be sold at a value greater than $ 67. Therefore, the minimum price that meets this condition is $ 68.
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