Break-even point

Definition:

Refers to the price at which a transaction produces neither a gain nor a loss. In the context of options, the term has the additional definitions:
1. Long calls and short uncovered calls: strike price plus premium.
2. Long puts and short uncovered puts: strike price minus premium.
3. Short covered call: purchase price of underlying stock minus premium.
4. Short put covered by short stock: short sale price of underlying stock plus premium.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Annual meeting

Meeting of stockholders held once a year at which the managers of a company report to the stockholders on the year's results.

Subscribe to the Term of the Day via email Get the Term of the Day in your inbox!


Create your free portfolio