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Question 23/80
A customer buys 100 ABC at $50 and at the same time sells an ABC April 50 call at $8. At expiration, ABC must be at what market price for the customer to break even?
Correct Answer: A
Step by Step Explanation:
* Breakeven Calculation: For covered call writing, breakeven is the stock purchase price minus the premium received.
* Purchase Price = $50
* Premium Received = $8
* Breakeven = $50 - $8 = $42.
* Other Options:
* B, C, and D: Incorrect because they do not reflect the proper calculation of stock price minus the premium.
References:
* Options Clearing Corporation (OCC) Education:OCC Options Guidance.
* Breakeven Calculation: For covered call writing, breakeven is the stock purchase price minus the premium received.
* Purchase Price = $50
* Premium Received = $8
* Breakeven = $50 - $8 = $42.
* Other Options:
* B, C, and D: Incorrect because they do not reflect the proper calculation of stock price minus the premium.
References:
* Options Clearing Corporation (OCC) Education:OCC Options Guidance.
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