Break-even

The stock price at which a trade neither makes nor loses money at expiration.

Break-even is the underlying price at which your option position ends up neither making nor losing money at expiration. For a long call it's the strike plus the premium you paid; for a long put it's the strike minus the premium. Buying a call at the 100 strike for 3 means the stock has to reach 103 before you start seeing real profit at expiry, not just 100.

Traders use break-even as a reality check before entering. It tells you how far the stock actually has to move for the trade to pay off, which is often further than beginners expect once the premium is factored in. The wider that gap, the more you're relying on a big move rather than just being right about direction.

A common mistake is treating the strike as the profit line and forgetting the premium sits on top of it. Also remember this break-even applies at expiration. Before that, time value and implied volatility can put you above or below it regardless of where the stock trades.

← Back to the glossary · Guides · Strategies

All options terms

Call Put Strike price Premium Expiration In the money (ITM)At the money (ATM)Out of the money (OTM)Intrinsic value Time value (extrinsic)Delta Gamma Theta Vega Implied volatility (IV)Open interest Assignment Exercise Spread Probability of profit (POP)Assignment risk / early assignment LEAPS Naked (uncovered) option Rho Historical volatility (HV)Volume Bid-ask spread Moneyness Covered call Cash-secured put Vertical spread Iron condor Straddle Strangle Rolling Margin Max pain American-style option European-style option Contract multiplier Debit vs credit Volatility skew The Greeks Underlying Hedge Leverage Expected move Notional value Protective put Collar Butterfly spread Iron butterfly Calendar spread Diagonal spread Credit spread Debit spread Bull call spread Bear put spread Ratio spread Synthetic position The wheel strategy Poor man’s covered call (PMCC)Box spread Put-call parity Pin risk IV crush IV rank / IV percentile Ex-dividend date Deep in the money Weeklys 0DTE (zero days to expiration)Order types (to open / to close)Buying power reduction Cash settlement Market maker Slippage Mid price Black-Scholes model

Educational use only. Quotes are delayed ~15 minutes and nothing here is financial advice. Options trading involves substantial risk of loss.