CFA Practice Question
The current price of an asset is 75. A three-month, at-the-money American call option on the asset has a current value of 5. At what value of the asset will a covered call writer break even at expiration?
A. 70
B. 75
C. 80
Explanation: The covered call writer receives the call premium of $5.
Breakeven = current stock price − call premium = $75 − $5 = $70
User Contributed Comments 1
| User | Comment |
|---|---|
| moneyguy | ahhh. call WRITER. I looked at it from the wrong perspective... |