An investor bought a 70-strike European put option on an index with six months to expiration.The premium for this option was 1. The investor also wrote an 80-strike European put optionon the same index with six months to expiration. The premium for this option was 8. Thesix-month interest rate is 0%.

Calculate the index price at expiration that will allow the investor to break even.

Answer rating: 100% (QA)

Question An investor bought a 70strike European put option on an index with six months to expiration The premium for this option was 1 The investor al... View the full answer