Graph 2 shows the profit and loss of a call option with a strike price of 40 purchased for $1.50 per share, or in Wall Street lingo, "a 40 call purchased for 1.50." A quick comparison of graphs 1 and 2 shows …

Understand how to calculate call and put option payoffs with step-by-step examples, diagrams, and formulas. Ideal for CFA and FRM exam prep.

Call Option Payoff Diagram, Formula and Logic This page explains the logic and calculation of call option profit/loss at expiration, payoff diagram, and break-even. See the same for short call (inverse …

Feb 6, 2017 · When we reverse the position and sell a call option, here is the payoff diagram for that. We have the same format of stock price on the x-axis (horizontal) and P&L on the y-axis (vertical). …

Understand the call option payoff diagrams and how they affect your options trading. Learn from payoff diagrams and understand the dynamics for both buyers and writers.

To make the chart, we first must plot the strike price on the x-axis. This is represented with an "X". The blue line represents the payoff of the call option. If S is less than X, the payoff of the option is 0, so it …

Apr 14, 2023 · Learn how the call option payoff works with charts and real examples. Discover strategies to manage risks and maximize profits in options trading.

The option is In-The-Money (ITM) in the sloping part of the graph, (spot below strike) and Out-of-The-Money (OTM) in the flat part of the graph. Between those two, at the strike price, the option is At …

Calculate the value of a call or put option or multi-option strategies.

Aug 13, 2025 · Investors buy call options with the expectation that the asset's price will rise, allowing them to net a profit by buying the asset below market value. What Is a Call Option?