Definition of breakeven in finance

A breakeven point is the level at which an investor or firm will have made no profit and no loss on an investment, i.e. a return of zero.

Investors and firms calculate a point or price at which all their costs are offset, and any gain above that breakeven point is profit.

For an option, the breakeven price will be the strike price with the premium taken into account. For example, if you own a call option which cost $2 to buy and has a strike price of $20, the stock price will need to be $22 for you to breakeven.

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