Breakeven point

The breakeven point in economics is the point at which cost or expenses and income are equal - there is no net loss or gain, one has "broken even".The point at which a firm or other economic entity breaks even is equal to its fixed costs divided by its contribution to profit per unit of output, which can be shown by the following formula: -
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Used in the context of securities to refer to the price at which a transaction produces neither a gain nor a loss. Also used in the context of options, the term has the following 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 minus premium.
4. short put covered by short stock: short sale price of underlying stock plus premium.