Profits from Buying a Call Option: Payoff Diagram 👍

Описание: ✅ Trade with our Sponsor Broker: Trade Nation http://www.financial-spread-betting.c...
✅ Check our website: http://www.financial-spread-betting.com/
✅ Please like, subscribe & comment if you enjoyed - it helps a lot!

Call Option payoff diagrams. http://www.financial-spread-betting.com/ PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Options trading can be very profitable but it can also be a bit tricky understanding stuff. Let's visualise how a call option value changes according to the underlying price relative to the strike price and expiry of the option.

Calculation of call option payoff; two alternative call payoff diagrams

Value of Option at Expiry (doesn't take into account what you've paid for the option). This is just to see in your mind how the option price would be valued at expiry.

We have a stock XYZ that is trading at $50
We are looking to buy a call option with a $50 strike price
A call option is the right (but not the obligation) to purchase XYZ stock at $50 on expiry.
If XYZ's stock price is $10 at expiry, then the option doesn't have any value because you have the right to buy the shares at $50 when you can buy the actual stock cheaper.
If XYZ's stock price is $60 at expiry, then the option value is $10 (ignoring what you've paid for the option for now)

Now let's look at the profit and loss chart of the option taking into account what we've paid for the option.

If you've paid more for the option than the price of the option at expiry then obviously you would lose money. And the converse is also true; if you've paid less for the option than the value of the option at expiry then you would make money. i.e. you need to get past the strike price plus the value of the option before you start making money.

Complete Options Trading Course
Check the rest of the videos on our Options Trading videos playlist at
   • What is an Options Contract? ✅