Basics of equity option payoffs

[Overnight]

See... you're really missing out. max(S-K, 0) is actually the new, updated version of Max Headroom, and he rocks. Has a Tiktok channel of his own with millions of followers and a bunch of swag with all the famous labels. Ya freakin' boomers just don't know nothin'.

P.S. Wait till you hear about his two brothers, C=S-K+P+B and P=C+K-S-B...

I see what you are doing here. You are trying to get me to post obscure video clips of Max Headroom, which I have. I will not fall for it. Nope, no more video fun for you, go back to options talk!

 

[Eikfe]

So... many... words...

First, get absolutely clear on the terminal P&L for a given strike, premium, and price at expiration. [1] Then - for early exercise, which you seem to be interested in for some reason (and which happens very rarely) - add in understanding of remaining extrinsic value (which the owner of the option is giving to you, free and clear, by exercising early.)

See? Simple.

[1] If you need practice with that - and it seems like you do - try this. Stick with the single options until you get it.

https://linuxgazette.net/options/payoff.html

This site is interesting. How can one use this when trading options ?
I'd say it's useful to see how much risk you're taking.
How do you guys see it ?

 

[BlueWaterSailor]

This site is interesting. How can one use this when trading options ?

Have you tried hovering your cursor over/clicking the "About" link? It's there for a reason.

That app is a speed trainer that I wrote for figuring out terminal values for a variety of options trades. Most people have to go stare at the analysis tab in their platform to figure out their max gain/loss/return at a given expiration price; I don't need to, and I believe that it's a very useful skill to have. The app records your times for each strategy, so you know what you need to work on.