Breakeven Point - BEP

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DEFINITION of 'Breakeven Point - BEP'

1. 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".

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BREAKING DOWN 'Breakeven Point - BEP'

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

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RELATED FAQS
  1. How do you find the break-even point using a payback period?

    It does not make sense to find the breakeven point using a company's payback period. A company's payback period is concerned ... Read Full Answer >>
  2. What is the relationship between degree of operating leverage and profits?

    The degree of operating leverage directly reflects a company's cost structure, and cost structure is a significant variable ... Read Full Answer >>
  3. What does break-even analysis tell a business about its shutdown point?

    Break-even analysis tells a company how many months it has left to operate based on the amount of expected cash flow and ... Read Full Answer >>
  4. How do traders use debit spreads to protect against loss?

    Options traders use debit spreads, also called net debit spreads, to exchange possible returns for reduced downside risk. ... Read Full Answer >>
  5. How does a forward contract differ from a call option?

    Forward contracts and call options are different financial instruments that allow two parties to purchase or sell assets ... Read Full Answer >>
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    The primary risks associated with trading derivatives are market, counterparty, liquidity and interconnection risks. Derivatives ... Read Full Answer >>

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