Explanation:
The call option is in-the-money because the underlying price is greater than the exercise price (USD 1.35 vs. USD 1.32, respectively).
Break-even price = X + C₀ = USD 1.32 + USD 0.08 = USD 1.40
Ultimate access to all questions.
Q.66 Jason Briggs purchased a 3-month call option by paying USD 0.08. The exercise price of the option is USD 1.32, while the underlying is priced at USD 1.35. Is the option currently in-the-money, and at what price will break-even occur?
A
In-the-money: No; Break-even Price: USD 1.27.
B
In-the-money: Yes; Break-even Price: USD 1.40.
C
In-the-money: Yes; Break-even Price: USD 1.35.
D
In-the-money: No; Break-even Price: USD 1.35.
No comments yet.