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Investment advice and corporate finance
Module 12Investment Management and Corporate FinanceAn investor writes (sells) a call with a strike of RM2.50 for a premium of RM0.20. At what share price at expiry does the writer break even?
The call writer keeps the RM0.20 premium and loses RM1 for every RM1 the share ends above the strike, so breakeven is strike + premium = 2.50 + 0.20 = RM2.70. RM2.30 (strike − premium) is the breakeven for a put. RM2.50 is the strike, where the option expires worthless and the writer is RM0.20 ahead. RM2.90 adds the premium twice. Source: SIDC Module 12 Study Outline (Jul-Dec 2026) Section 7 (Topics 13 Options, 14 Futures, 15 Swaps and Interest Rate Options); J. C. Hull, Options, Futures, and Other Derivatives (as at October 2026).
Using strike − premium, which is a put's breakeven.
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