Option payoffs

An option gives the right, but not the obligation, to buy (call) or sell (put) an asset at a predetermined strike price. This visualization shows profit/loss at expiration for four fundamental positions. A long call (coral) profits when prices rise above the strike plus premium paid, offering unlimited upside. A short call (dark blue) is the mirror image: the seller collects premium but faces unlimited losses if prices surge. A long put (teal) profits when prices fall below the strike minus premium, protecting against downside. A short put (yellow) collects premium but incurs losses if prices collapse. The vertical dashed line marks the strike price where intrinsic value switches on; the horizontal line shows breakeven.

Data: Theoretical payoffs with strike K=100, call premium=10, put premium=10. Underlying price range: 0-200.