Option Fundamentals   • 17
5/18/2012
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5/20/2013 249 499
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ITMGREEN
We are assuming that this put option costs $5, leading to a breakeven 
line of $45. This breakeven line is like an upside-down hurdle in that we 
would like the stock to finish below $45; if it expires below $50 but above 
$45, again, we will be able to profit from the exercise, but this profit will not 
be great enough to cover the cost of the option. 
5/18/2012
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Breakeven Line: $45.00
GREEN
Obviously, if we can gain downside exposure to a stock, we must be 
able to accept it as well. We can accept downside exposure by selling a put; 
this book represents a sold put graphically like this: