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In early September, Bubba buys 100 shares of XYZ for $83 per share and simultaneously writes one XYZ March 90 call for $4.
What is the price for XYZ stock at which Bubba will breakeven?
Suggested Answer: D
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$79. Bubba's breakeven is his cost of the stock less the premium he received ($83 - $4).
12 comments · newest first
MA
Maryanne
11 months ago
$87 is too low, it’s definitely $86!
KA
Kallie
12 months ago
Wait, how does that even work?
SA
Sarah
12 months ago
I thought it would be higher, like $94.
CL
Clare
12 months ago
Yup, $86 makes sense!
LA
Lashonda
1 year ago
Breakeven is $86, right?
ST
Stefanie
1 year ago
If I recall correctly, Bubba bought the shares for $83 and got $4 from the call, so wouldn’t that mean he needs the stock to be at least $87 to breakeven?
KA
Katina
1 year ago
I’m a bit confused about whether to add or subtract the call premium from the stock price. I feel like I need to double-check my notes on this.
CA
Carman
1 year ago
I remember a similar question where we had to factor in the premium from the call option. I think it’s the stock price plus the premium received.
SH
Shayne
1 year ago
I think the breakeven price is the purchase price minus the premium from the call, but I'm not entirely sure how to calculate that.
AL
Aleisha
1 year ago
Okay, let me think this through. We're processing events in real-time, so we'll want to look at the throughput metrics like "MessagesInPerSec" or "BytesInPerSec". I'm leaning towards "MessagesInPerSec" as the most important one.
CL
Claudia
1 year ago
Okay, let's see... I remember learning about for subscribing to notifications, so that's my best guess.
NA
Nathan
1 year ago
Hmm, I'm a bit unsure about this one. I know IT Service Management is important, but I'm not sure what the specific requirements are for a successful implementation. I'll have to think this through carefully.