What is Break-Even Price?
Break-even price is the stock price at expiration at which an options trade neither makes nor loses money. For a long call, the break-even is the strike price plus the premium paid. For a long put, it is the strike minus the premium. For short positions, break-even is the point where the premium received is entirely consumed by intrinsic value. Understanding break-even at entry is critical for options traders: if you buy a $150 call for $4, you need the stock above $154 just to break even at expiry, not just above $150. Break-even analysis also extends to multi-leg spreads and income strategies like covered calls and cash-secured puts.
Formula
Long Call break-even = Strike + Premium Paid
Long Put break-even = Strike − Premium Paid
Short Call break-even = Strike + Premium Received
Short Put break-even = Strike − Premium Received
Calculator
How to Use
- 1Identify position type: Long or short, call or put: each has a different break-even formula.
- 2Note the strike and premium: From the option chain or your order confirmation.
- 3Apply the formula: For a long call: Strike + Premium. For a long put: Strike − Premium.
- 4Compare to current price: How far does the stock need to move for you to break even? This is the required move.
Worked Example
Example: Long call on a $150 stock
Strike
$150
Premium Paid
$4.50
Break-even = $150 + $4.50 = $154.50. The stock must close above $154.50 at expiration for this trade to be profitable. That is a 3% move from current price. If you paid $4.50 for a 30-day option with 25% IV, a 3% move is achievable but not guaranteed.