Breakeven Point - BEP

Loading the player...

What is the 'Breakeven Point - BEP'

The breakeven point (BEP), in general, the point at which gains equal losses.

2. In options, the market price that a stock must reach for option buyers to avoid a loss if they exercise. For a call, it is the strike price plus the premium paid. For a put, it is the strike price minus the premium paid.

Also referred to as a "breakeven".

BREAKING DOWN 'Breakeven Point - BEP'

For businesses, reaching the break-even point is the first major step towards profitability.

RELATED TERMS
  1. Strike Price

    The price at which a specific derivative contract can be exercised. ...
  2. Bear Call Spread

    A type of options strategy used when a decline in the price of ...
  3. In The Money

    1. For a call option, when the option's strike price is below ...
  4. Average Strike Option

    A type of Asian option in which the strike price is based on ...
  5. Near The Money

    An options contract where the strike price is close to the current ...
  6. Time Value

    The portion of an option's premium that is attributable to the ...
Related Articles
  1. Professionals

    Selling Puts

    An investor who sells a put believes that the underlying stock price will rise and that they will be able to profit from a rise in the stock price by selling puts. An investor who sells a put ...
  2. Economics

    What is the Breakeven Point?

    In general, when gains or revenue earned equals the money spent to earn the gains or revenue, you’ve hit the breakeven point.
  3. Professionals

    Selling Calls

    An investor who sells a call believes that the underlying stock price will fall and that they will be able to profit from a decline in the stock price by selling calls. An investor who sells ...
  4. Professionals

    BUYING PUTS

    Buying Puts An investor who purchases a put believes that the underlying stock price will fall and that they will be able to profit from a decline in the stock price by purchasing puts. An investor ...
  5. Professionals

    Buying Puts

    An investor who purchases a put believes that the underlying stock price will fall and that they will be able to profit from a decline in the stock price by purchasing puts. An investor who purchases ...
  6. Professionals

    MANAGING AN OPTION POSITION

    Managing an Option Position Both the buyer and seller, in an option trade, establish the position with an opening transaction. The buyer has an opening purchase and the seller has an opening ...
  7. Professionals

    Tips For Series 7 Options Questions

    We'll show you how to ace the largest and most difficult section of this exam.
  8. Professionals

    Buying Calls

    An investor who purchases a call believes that the underlying stock price will rise and that they will be able to profit from the price appreciation by purchasing calls. An investor who purchases ...
  9. Professionals

    Long Stock Long Puts / Married Puts

    An investor who is long stock and wishes to protect the position from downside risk will receive the most protection by purchasing a protective put. By purchasing the put, the investor has locked ...
  10. Professionals

    Strategies And Risk

    Strategies And Risk
RELATED FAQS
  1. How do I determine the breakeven point for a short put?

    Learn how to determine the breakeven point for a short put. Shorting puts is appropriate for sophisticated traders who understand ... Read Answer >>
  2. How do I set a strike price for an option?

    Learn about the strike price of an option and how to set a strike price for call and put options depending on risk tolerance ... Read Answer >>
  3. How do I change my strike price once the trade has been placed already?

    Learn how the strike prices for call and put options work, and understand how different types of options can be exercised ... Read Answer >>
  4. What does break-even analysis tell a business about its shutdown point?

    Learn what a break-even analysis tells a company about its shutdown point, and understand why a company's break-even point ... Read Answer >>
  5. How does the term 'in the money' describe the moneyness of an option?

    Find out what in the money means about the moneyness of call or put options and what it indicates about the relationship ... Read Answer >>
  6. What is the difference between in the money and out of the money?

    Learn about how the difference between in the money and out of the money options is determined by the relationship between ... Read Answer >>
Hot Definitions
  1. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  4. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  5. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
  6. Call Option

    An agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument ...
Trading Center