# Option call and put graph

This page discusses the four basic option charts and how to set them up. On the other side of this deal, there is someone who is willing to sell you this right for you to buy Microsoft from him for There two main types of four option spreads: Perhaps an example would be helpful:

Buying a put option gives you the right to sell the underlying asset at the strike price. But the profit is limited to the price of the option. It's very helpful to be able to chart the payoffs an option can return.

The maximum gain is the net credit of the option prices, the maximum loss is the difference in option call and put graph option strike prices. You drive there only to find out that it's "sold out". Now we'll see what happens when you Short a Call sell a call option. All rights reserved, no reproduction or re-transmission of this document is permitted without express permission from Star Research, Inc.

For call options in general, see Option law. From Wikipedia, the free encyclopedia. After reaching the strike price, the payoff of the option is S-X, so the line will increase at a 45 degree angle option call and put graph the numbers are spaced the same on both axes. The main difference is that the iron condor combines both call and put options whereas the butterfly is call or put exclusive. The x-axis represents the price of the underlying asset or "S" like the stock.

Notice also how the loss is limited to the net option price. On the other side of this deal, there is someone who is willing to sell you this right for you to buy Microsoft from him for This is represented with an "X". Observe how the PL vs Price Today would obviously have a zero profit if you closed the position today and the underlying price stayed the same. When we view the PL chart for varying CALLS, we option call and put graph that the in the money calls have higher maximum losses, but a lower break even price.

For any PL vs Price chart, you usually see two plots: As you can see, PL vs Price graphs are a very effective to communicate how options work together to form specific trading strategies. This "rain check" is a guarantee that you will get the TV for the sale price when they are option call and put graph in stock. Similarly if the buyer is making loss on his position i.

This high probability of profit comes from the statistical fact that the the underlying price will most likely remain nearly the same given a time limitation. Notice how the butterfly spread is a neutral strategy being most profitable when if the underlying price stays the same. Unsourced option call and put graph may be challenged and removed.