Breakeven
Also called: breakeven, break-even, break even, breakeven price, breakeven point.
How it is read
In trading the word is used in at least three distinct senses. Each one answers a different question. They are worth keeping apart. A price breakeven is the level at which a position recovers its cost. An option's expiry breakeven relates the strike to the quoted premium paid. That is a different question from the premium round-trip breakeven. The round-trip version applies when a position is closed before expiry. A frequency breakeven is different again. It is the share of outcomes that would have to be favourable. At that share, a given set of assumptions sums to zero. Those assumptions are average gain, average loss and cost.
What it does not tell you
Breakeven says nothing about how likely the level is to be reached. It says nothing about when. It is a threshold derived from stated assumptions. It moves the moment any of them change. A breakeven quoted without its cost scope is close to meaningless. Rounding matters too. Quantities come in whole units and prices sit on a tick. A tick is the smallest price step the exchange allows. So the smallest price that covers cost usually lands a little beyond exact zero. It rarely lands on it.
See it in an experiment
Change one input in Market X-Ray and watch what happens.
Build a strategy — How do separate option legs combine before and at expiry?
Related concepts
Breakeven: How Far the Underlying Has to Move Before You Are Even
A bought option only turns even once the underlying clears the strike by the premium paid, plus charges.
Open the lesson