What is the breakeven point for an investor who owns 100 shares of ABC common stock at $45 and sells one ABC Nov 50 call at $2.5?

To determine the breakeven point for an investor who owns common stock and sells a call option, you need to consider both the cost basis of the stock and the premium received from selling the call option.

In this scenario, the investor owns 100 shares of ABC common stock, which was purchased at $45 per share, resulting in a total investment of $4,500 (100 shares x $45). The investor then sells one call option (which covers 100 shares) for a premium of $2.50 per share, totaling $250 (100 shares x $2.50).

The breakeven point for this strategy occurs when the total cost of the investment is equal to the selling price received from the stock plus the premium from the call option. To find the breakeven price per share, you subtract the premium received from the purchase price of the stock:

Breakeven point = Purchase Price - Premium Received per Share Breakeven point = $45 - $2.50 = $42.50

Thus, the breakeven point for the investor is $42.50. At this price, if the stock were sold, the investor would recoup all costs (the original purchase price minus the premium received