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 end of the day, it's a gamble of a lifetime for everyone choosing, as no one knows if they'll live longer or fall short of the above noted breakeven point in total dollars received.
Now although the breakeven calculation that appears in many textbooks appears to only apply to those businesses with variable costs (businesses that calculate gross profit and therefore are able to calculate a gross profit margin), the reality is that the breakeven point can be calculated for any business.
Breakeven economic analysis: Just as finance and real estate disciplines had their origins in economics, the breakeven point formula is closely associated with the breakeven point analysis of a perfectly competitive firm.
The problem is solved using breakeven point analysis:
10 Breakeven point = Total fixed costs/weighted avg.
While a specific breakeven point has been determined, given an assumed sales mix, it would be difficult to say anything specific about the individual product lines.
With similar returns, the breakeven points in years for the deferred annuity vis-a-vis a non-deductible IRA should be the same as the breakeven point for a non-deductible IRA vs.
In this study, the number of years before the non-deductible IRA yields a greater after-tax and after-penalty accumulation than a non-IRA investment is expreseed as the breakeven point.
In response to current conditions, ADC is targeting to further lower its breakeven point toward $250 million in quarterly sales from approximately $300 million.
Given continued industry weakness, we are redoubling our efforts to further gain market share in our key products, continue to lower our breakeven point and further strengthen our balance sheet.
The far left age column provides the breakeven point of the comparison for when each option would start losing total money by starting early, versus waiting till age 67.
At the end of the day, it's a "gamble of a lifetime" for everyone choosing, as no one knows if they'll live longer or fall short of the above noted breakeven point in total dollars received.