Call & Put Options

Definitions, payoff vs profit formulas, calculator, and a profit diagram (long/short).

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Call Put Payoff & Profit

Call and Put Options

1) What is a call vs a put?

Feature Call Option Put Option
Right Right to buy the underlying at strike X Right to sell the underlying at strike X
View Bullish (expect price ↑) Bearish (expect price ↓)
Max loss (buyer) Premium Premium
Profit driver Price rises above strike Price falls below strike
American vs European:
• American options can be exercised any time up to expiration.
• European options can be exercised only at expiration.

2) Payoff and Profit formulas (per unit)

Call payoff: max(S − X, 0)
Call profit (long): max(S − X, 0) − premium

Put payoff: max(X − S, 0)
Put profit (long): max(X − S, 0) − premium
Excel syntax (profit)
Long call profit: =MAX(S-X,0)-Premium
Long put profit: =MAX(X-S,0)-Premium
Short side is the negative of long side (zero-sum ignoring fees).

ITM / ATM / OTM (quick reference)

Relationship Call Option Put Option
X < S In the money Out of the money
X = S At the money At the money
X > S Out of the money In the money

Options payoff / profit calculator + diagram

Output will appear here.
Diagram shows profit for the selected position (long or short). Break-even is where profit = 0.
Note: Exercise decision is based on payoff (S−X vs 0). Profit subtracts the premium.
HW

HW • Options

  1. Long put on Swiss francs: premium = $0.05, X = $0.60. Spot at expiration S = $0.55. Compute payoff and profit.
  2. Long call on Swiss francs: premium = $0.05, X = $0.50. Spot at expiration S = $0.58. Compute payoff and profit.
  3. Long call on Swiss francs: premium = $0.05, X = $0.60. Spot at expiration S = $0.55. Compute payoff and profit. (Optional: draw diagrams for both long and short call.)
  4. Long put on Swiss francs: premium = $0.05, X = $0.50. Spot at expiration S = $0.58. Compute payoff and profit. (Optional: draw diagrams for both long and short put.)
Reminder: Payoff ignores premium. Profit = payoff − premium (for the buyer). The seller’s profit is the negative of the buyer’s profit (zero-sum ignoring fees).
Educational disclaimer: This page is for instructional use on jufinance.com. Market conventions vary (quotes, contract multipliers, settlement).