Calculate payoff of put option

This mini-game will teach you the most fundamental facts about options trading. Our task is to calculate the profit and loss from this trade at expiration.

With practise, you should be able to make this calculation in your head or with a calculator in a just a few seconds.

So these calls are in-the-money. Our loss on these calls is their value less the amount we collected by selling them.

Understanding Option Pricing Theory

Note that if we had bought the options in these examples instead of sold, our profit and loss is simply the opposite. Likewise, if we had bought the puts, paying 36 cents, we would have simply lost of all this premium.

It is essential to master calculate payoff of put option mini-game if you want to become a successful options trader. The most basic fact about an option is whether it is in- or out-of-the-money and what this means for its intrinsic value at expiration.

This is a bit like knowing the final destination of steal pips forex peace army option; understand that and you will have a better sense of the journey the option calculate payoff of put option take to get there.

Why not start a FREE trial of Volcube and you can play this mini-game and several others.

Put Options Profit, Loss, Breakeven - Online Trading Concepts

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Options Pricing: Profit And Loss Diagrams

Firstly, what was the trade? At expiration, the spot is trading Therefore these puts have expired worthless.

This is good news, because we sold the puts at 36 cents. So we have the answer. Navigate Volcube Starter Edition Products Options articles About Support Terms and conditions Site Map Privacy and cookie policy.