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 ?
At the Royal Marsden, we initially investigated a single cycle of BEP in patients with intermediate risk of recurrence.
Fortunately, thanks to (https://twitter.com/iamwill/status/870695440441778176) will.i.am's confirmation Friday, she will still be on board for the next BEP album.
Respondents were state directors (n = 14), trainers (n = 5), and business consultants (n = 10) for the BEP, and BEP entrepreneurs with deafblindness (n = 12), providing a total sample of 41 participants from 15 large and small states across all regions of the continental U.S.
Finally, substituting (16), (11), (18) and (39) in (13), we obtain the exact average BEP expressions for IDF relaying M2M cooperative networks.
BEP will also drive initiatives to train school governors, with a recruitment campaign already under way.
"The International Monetary Fund provides BEP estimates for Kuwait until 2016.
The 1-click and now 0-touch BEP deployment and customization of Samsung devices dramatically bolsters the overall rollout process at scale,” said Nick Rea, vice president of Technical Solutions at Samsung Electronics America.
Moreover, the BEP also provided support to the Education Department for enhancing its planning, budgeting and management capacities through the establishment of Education Management Information Systems (EMIS) in the three focused districts.
When complete BEP will deliver the capability to treat nuclear waste recovered from MSSS, immobilise it and prepare it for long term storage.
Bydd Anna o Aberdaugleddau, sy'n beiriannydd ansawdd yn BEP, yn mynychu'r ysgol ac yn trefnu ymweliadau a'r ffatri hefyd, ynghyd ag egluro'r cyfleoedd sydd ar gael ym maes peirianneg wrth rieni a disgyblion.
The firms have been selected to deliver Sellafield's Box Encapsulation Plant (BEP) project - a four-year programme potentially worth between PS240m and PS336m.