Question

In june, a client buys 100 shares of xyz corporation at $27 per share and writes an xyz october 30 call at a $3 premium. the trade is executed in a cash account. what is the breakeven point for the writer

Answer 1

The breakeven point for the writer on the share trading is equal to $24.

The third option is the correct answer.

What is a breakeven point?

A breakeven point is a situation where the company earns no profit and no loss amount in the Cost-Volume-Profit (CVP) analysis.

Given values:

Share price: $27

Premium per share: $3

Computation of breakeven point:

$\rm\ Breakeven \rm\ point = \rm\ Share \rm\ price - \rm\ Premium \rm\ per \rm\ share\\\rm\ Breakeven \rm\ point = \ 27 - \ 3\\\rm\ Breakeven \rm\ point = \ 24$

Question's missing part:

The options are as follows:

1) $33

2) $30

3) $24

4) $33

Therefore, the point where the shares are breakeven is $24.

Learn more about the breakeven point in the related link:

https://brainly.com/question/10190285

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