Premium = Intrinsic Value + Time Value Here, Premium value of Rs 326 for 10400 ( Nifty Strike ) is taken from NSE website. Intrinsic Value ( Call ) = Max ( 0, spot - strike ) = max (0, 10700 - 10400) = max (0,300) = 300 Time value = Premium - Intrinsic value = 326 - 300 = 26 Cut off Price or Break Even Price ( call option ) = Strike + Premium = 10400 + 326 = 10726