Long Call Break-Even Price
Underlying price at expiration at which a long call breaks even: strike price plus premium paid.
When to use: Use to evaluate how far the underlying must move for a long-call directional bet to recoup its premium. Above this number, intrinsic value exceeds premium paid; below it, the trade is a loss at expiration.
Formula
Variables
| Symbol | Name | Description | Unit |
|---|---|---|---|
| BreakEven | Break-Even Price | Underlying price at which the position breaks even at expiration | $ |
| Strike | Strike Price | Exercise price of the option contract | $ |
| Premium | Premium per Share | Cash credit received per share for selling the option | $ |
Real-Life Examples
Example 1: $50 Strike Call at $1.20
You buy a $50-strike call for $1.20 of premium per share.
Given
Step-by-Step
The underlying must finish above $51.20 at expiration for the long call to be profitable — roughly a 2.4% move above strike.
Frequently Asked Questions
Yes. Before expiration the call has time value, so the position can be profitable below the break-even on a mark-to-market basis. The break-even formula assumes you hold to expiration and exercise or close at intrinsic value only.
Add the per-share commission to the premium paid. For a $1.20 premium plus $0.05 commission, break-even is Strike + 1.25.