break-even point

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Break-even point

Refers to the price at which a transaction produces neither a gain nor a loss. In the context of options, the term has the additional 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 of underlying stock minus premium.
4. Short put covered by short stock: short sale price of underlying stock plus premium.

Break-Even Point

1. The sales or revenues necessary to cover costs and prevent a firm from operating at a loss. The breakeven may be relatively stable or it may fluctuate, depending on the company or industry. Companies with high breakevens tend to have large fluctuations in earnings from year to year.

2. The price of a security that, if one sells at it, will cause the investor to neither make a profit nor lose money on the sale.

3. In options, the price of the underlying asset that will ensure that the option holder will neither make a profit nor lose money on exercising the option. In calls, the break-even point is the strike price added to the premium, while in puts, it is the strike price minus the premium.

break-even point

In any project,the point at which revenue will be sufficient to pay all required expenses and debt service. Most industries have generally recognized rules of thumb for the appropriate break-even point. For apartments, it might be 80 percent occupancy, for self-storage it might be 55 percent occupancy,and for business center space it might be 75 percent occupancy.Most construction lenders require that a project at least reach the break-even point before construction lending can be converted to fixed-rate and lower-rate permanent financing.If preparing a pro forma for a project and your break-even point is dramatically different from the rule of thumb for your industry,it may be time to check your assumptions or your math.

References in periodicals archive ?
Meanwhile, he revealed that BEP - which is made up of head teachers across the city - would create "families of schools" that would "feed off each other".
Comerford noted that PSE&G's BEP campaign will feature seminars in other major counties in the months ahead.
Although Quanta is about to enter the second year of this contract, BEP did not announce the award until last week because of a lengthy confirmation process.
Items available at the gift shop range from core coins and medals to limited-time commemorative products, which will be sold alongside popular BEP items such as currency sets and sheets.
BEP is focusing on accelerating smart energy actions to help deliver the city's overall carbon emissions reduction target of 60% by 2026.
Related BEP legal journals include "Review of Law & Economics," "Muslim World Journal of Human Rights," "Journal of Tort Law," "Theoretical Inquiries in Law," "Issues in Legal Scholarship," "Global Jurist," "International Commentary on Evidence" and "Asian Journal of Comparative Law.
Thus, we have a very low BEP, which is why we can state thatC* The next customer commitment will result in profitability, regardless of its size.
Completion of the BEP by CDI Engineering on-time and on-budget is an important milestone to reach in the construction of our poly plant as we move forward with our plans to establish in-house polysilicon production," said Mr.
BEP described the new journal as "at the intersection of theory and practice" and "combines conceptual analysis and normative deliberations in order to shape academic debates and policy decisions.
The BEP rant in front of a real band, with guitar, bass and drums doing a good job of aping the sound of collaged samples and cut-up breakbeats, turntablist DJ Motive scratching the actual vinyl.
In separate presentations, the acting country manager, Sierra Leone IDB, Mamoud Kamara, and the manager, West Africa Region Country Programme Department, stated that BEP is in high demand.
The BEP prints billions of Federal Reserve Notes for delivery to the Federal Reserve System each year.