James bought a stock for $25 and a put option for the exercise price of $22 at a price of $1. The stock price at the expiration moves to $29. What is the breakeven price of the protective put position?

A. $24
B. $26
C. $28

Correct Answer: B

The breakeven price for a protective put position is equal to the underlying price at the initiation of the contract plus the put premium. Therefore, breakeven price = 25 + 1 =$26.