Stock price is $150. You see an at-the-money call option trading at $15, and at-the-money put trading
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Question:
Stock price is $150. You see an at-the-money call option trading at $15, and at-the-money put trading at $5. The options have the same expiration date. You decide to buy a straddle. What will be the breakeven points of the strategy, i.e., at what stock prices will your profit will be exactly zero?
A. Two breakeven points, S* = 145 and S* = 165
B. One breakeven point, S* = 150
C. Two breakeven points, S* = 135 and S* = 155
D. Two breakeven points, S* = 130 and S* = 170
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