Imagine a trader buys a put option. The option is worth $5 and the trader has made a.

Imagine a trader buys a put option. The option is worth $5 and the trader has made a.

Imagine a trader buys a put option. A put option gives the buyer the right, and not the obligation, to sell a stock at a designated price, known as the strike price, on or before the expiration date. Imagine a trader buys a put option on a stock with a strike price of 500 and pays a premium of 25. what is the trader's break-even point? Apr 3, 2025 · Imagine a trader purchased a put option for a premium of 80 cents with a strike price of $30 and the stock is $25 at expiration. For this solution, we’ll figure out where a trader breaks even when buying a put option on a stock. imagine a trader buys a put option on a stock with a strike price of 500 and pays a premium of 25. This is because the trader needs the stock price to fall below this point for the option to be profitable. . What is the trader's break-even point? 500 525 475 Options 1 and 2. In this case, the trader acquires a put option with a strike price of 500 and pays a premium of 25. Your solution’s ready to go! Our expert help has broken down your problem into an easy-to-learn solution you can count on. The option is worth $5 and the trader has made a ***Step 2: Calculate Break-Even Point*** - The break-even point for a put option is calculated by subtracting the premium paid from the strike price. Aug 7, 2023 · When a trader buys a put option, they gain the right to sell a** stock **at a specified strike price, regardless of its current market value. For a small upfront cost, a trader can profit from stock prices below the strike price until the option expires. Traders buy a put option to magnify the profit from a stock’s decline. klrqo stuo lmtdzdu yyt pael vjhm donp mjj ssfhx atjz