Call Options
The breakeven point for a call option buyer is:
Call BE = Strike + Premium. Put BE = Strike - Premium.
Complete Analysis & Legal Rationale
For a call buyer, breakeven = Strike Price + Premium. The stock must rise above this point for the buyer to profit. At exactly this price, gains from exercise equal the premium paid.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Strike minus premium is the breakeven for a PUT buyer.
Matches the verified teaching point in the explanation.
Market price is variable and not used in breakeven calculations.
Premium is the cost, not the breakeven point.
Official Standard: Governs options accounts, approvals, and related supervisory requirements (verify current text).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.