If an investor buys 1 XYZ Aug 40 put for $5 and also purchases 100 shares of XYZ at $40 each, what is her breakeven point?

To determine the breakeven point for this investor's combined positions, we need to consider both the cost of the shares purchased and the cost of the put option.

The investor buys 100 shares of XYZ at $40 each, which amounts to a total cost of $4,000 (100 shares x $40). Additionally, the investor purchases a put option, which costs $5. Since each option typically represents 100 shares, the total cost of the put is $500 (1 option x $5 x 100 shares).

Now, we add the cost of the shares and the cost of the put option to find the total investment:

Total cost = Cost of shares + Cost of put option

Total cost = $4,000 + $500

Total cost = $4,500

To find the breakeven point, we need to divide the total investment by the number of shares owned. Since the investor holds 100 shares, we calculate the breakeven price per share:

Breakeven point = Total cost / Number of shares

Breakeven point = $4,500 / 100

Breakeven point = $45

Therefore, the investor's breakeven point is $45. This means that in