"Mastering Options: Breakeven Points Simplified"
The article explains the breakeven point in options trading, which is the price at which the buyer neither profits nor loses, calculated as "Strike Price + Premium Paid" for call options and "Strike Price - Premium Paid" for put options, with examples provided for clarity.|
The breakeven point in options trading is the price at which the buyer of the option neither makes a profit nor incurs a loss. It depends on the type of option (call or put) and can be calculated using the formulas below:
Example:
If you purchase a call option with a strike price of $100 and pay a premium of $5, the breakeven point will be $105 (Strike Price + Premium Paid). Similarly, if you purchase a put option with a strike price of $100 and pay a premium of $5, the breakeven point will be $95 (Strike Price - Premium Paid).
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