Payoff diagram
Also called: payoff chart, option payoff
A chart or table showing the profit or loss of a derivative position at expiry for each possible price of the underlying.
Payoff diagrams show breakevens, maximum gains and maximum losses. They ignore what happens before expiry, such as margin calls, time decay and changes in volatility.
Learn more in these lessons
- Option payoff diagrams and breakevensHow do you work out where an option position makes or loses money?
Related terms
Spotted a mistake or something unclear? Report it by email. Here is how corrections work.