Definition of "Break-Even Point"

In securities and in options, it is the price where the investor has neither a gain nor a loss from the transaction. However, the break-even point is calculated differently depending on the option strategy. The break-even points are determined by: * Long calls and short uncovered calls--the strike price plus premium. * Long puts and short uncovered puts--the strike price minus premium. * Short covered calls--the purchase price minus premium. * Short put covered by short stock--the short sale price of underlying stock plus premium.