Break Even (Options)

The Break Even point of an option is the price that the underlying asset must reach in order that the option holder can recover the option premium (the price they paid for the option). When the asset price gets beyond break even the option is said to be 'in the money', but while the asset price has not yet reached break even the option is said to be 'out of the money'.

An option which is 'out of the money' on the option expiry date, may still be exercised by the option holder, if it reduces their overall loss, i.e they may make a smaller loss by exercising the option rather than just letting it expire.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

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