Break-Even Point

Business, Legal & Accounting Glossary

Definition: Break-Even Point


Break-Even Point


What is the dictionary definition of Break-Even Point?

Dictionary Definition


  1. The price at which an option’s cost is equal to the proceeds acquired by exercising the option. For a call option, it is the strike price plus the premium paid. For a put option, it is the strike price minus the premium paid.
  2. The price at which a securities transaction produces neither a gain nor a loss. 3. The volume of sales at which a company’s net sales just equals its costs.

Full Definition of Break-Even Point


The break-even point for any investment is the price at which an investor neither makes nor loses money on that investment.

An investor’s break-even point must include the recoupment of all fees, commissions and other expenses associated with the purchase and sale of the investment. When trading options, the break-even point for a call option is the option’s strike price plus its premium. For a put option, the break-even point is the strike price of the option minus the option’s premium. For a business, the break-even point is the point at which a company’s net income precisely equals it costs. In the case of real estate, the break-even point occurs when rental income exactly matches all debt expenses. Knowing an investment’s break-even point is considered essential for effective money management.


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Definition Sources


Definitions for Break-Even Point are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 20th November, 2021 | 0 Views.