Options Payoff Visualizer
An option is a contract giving the right — not the obligation — to buy (call) or sell (put) an underlying at a fixed strike price for a set period. The buyer pays a premium for that right; the seller (writer) collects the premium and takes on the matching obligation. The tool above plots profit and loss at expiration for the four building-block strategies — Long Call, Long Put, Short Call, Short Put — so the characteristic kinked payoff shape is immediately visible.
A note on the Vietnam market: if you are working in Vietnam and used to trading options elsewhere, be aware that single-stock equity options are not yet a retail product here. The local exchanges offer VN30 index futures and a range of broker-issued covered warrants, which behave differently from standard listed equity options. This page is therefore educational — it teaches how to read payoff diagrams, break-even and maximum loss. All price, strike and premium figures are illustrative per-share units, not VND quotes.
With the tool's default setup (Long Call, strike 150, premium 5, spot 155), the break-even is 155 (strike plus premium), the maximum loss is capped at the premium of 5, and the upside is theoretically unlimited as the price climbs. Because the spot of 155 sits exactly on the break-even, the displayed P&L is 0 — neither winning nor losing. That is the core intuition the chart delivers: where the price sits relative to strike and premium decides whether you are in the green zone or the red.
The four payoff formulas the tool uses
Let S be the underlying price at expiration, K the strike, and P the premium (per share). The P&L at expiration of one contract, normalised to a single share, is:
| Strategy | P&L formula | Max loss | Max gain |
|---|---|---|---|
| Long Call (buy a call) | max(0, S − K) − P | The premium (5) | Unlimited |
| Long Put (buy a put) | max(0, K − S) − P | The premium (5) | K − P (as S → 0) |
| Short Call (write a call) | P − max(0, S − K) | Unlimited | The premium (5) |
| Short Put (write a put) | P − max(0, K − S) | Large (up to K − P) | The premium (5) |
Break-even
The price S where P&L = 0:
- Calls: break-even = K + P. Default: 150 + 5 = 155.
- Puts: break-even = K − P. A Long Put on the same strike: 150 − 5 = 145.
How the tool computes the chart
The chart sweeps the underlying price from 105 to 195 (strike ±30%), evaluates the P&L at each step with exactly the four formulas above, and draws the line. Vertical reference lines mark the strike and the current price; the horizontal line at zero is the profit/loss boundary. The key-metrics panel reports break-even, maximum loss (the premium for long positions, "Unlimited" for short positions) and the current P&L at the spot you enter.
What the model leaves out
This is payoff at expiration, not a pricing model for the option's life. The tool ignores time value (Theta), implied volatility (Vega), the risk-free rate, dividends, commissions and taxes. Before expiration, an option's market price moves with all of these (Black–Scholes describes them), so a real position's value curve is smoother than the hard kink shown here. Treat the diagram as an intuition sketch, not a quote.
Example 1: Long Call — a bet on a rising price (default setup)
Illustrative assumptions: strike K = 150, premium P = 5, units are per-share. You buy one call.
| Price at expiration (S) | Calculation | P&L (per share) |
|---|---|---|
| 105 (sharp drop) | max(0, 105−150) − 5 | -5 (premium lost) |
| 140 | max(0, 140−150) − 5 | -5 |
| 155 (break-even) | max(0, 155−150) − 5 | 0 |
| 170 | max(0, 170−150) − 5 | +15 |
Reading the table: no matter how far the price falls, your loss is capped at 5 — the whole premium. That capped downside is the appeal of buying options. You only move into profit once the price clears 155, and every unit above that is a unit of gain. At the spot of 155, P&L is exactly 0 because 155 coincides with the break-even.
Example 2: Long Put — a bet on a falling price
Same K = 150, P = 5, but now you buy a put. Break-even = 150 − 5 = 145.
| Price at expiration (S) | P&L (per share) |
|---|---|
| 130 | +15 |
| 145 (break-even) | 0 |
| 155 | -5 (premium lost) |
A Long Put acts like portfolio insurance against a decline: the most you can lose is the 5 premium, while the payoff grows as the price drops (reaching 15 at 130).
Example 3: why writing options (short) is riskier
For a Short Call (write a call, K=150, P=5): if the price holds at 150 you keep the full premium (+5), but if it rallies to 170 you lose -15 — and that loss has no theoretical ceiling. For a Short Put (K=150, P=5): at 155 you keep +5, but if the price collapses to 120 you lose -25. This is why the tool labels the short positions' max loss "Unlimited": writers swap a small, certain premium for large tail risk. Again, this is conceptual — single-stock options are not a retail product in Vietnam, so read every figure as an illustration.
Frequently asked questions
Can retail investors trade single-stock options in Vietnam?
Not yet as a mainstream product. Single-stock equity options are not a retail product in Vietnam. The local derivatives market offers VN30 index futures and broker-issued covered warrants, which behave differently from standard listed equity options. This tool is therefore educational: it teaches how to read payoff diagrams, break-even and maximum loss. Every price, strike and premium figure is an illustrative per-share unit, not a VND quote.
How is an option break-even calculated?
For a call: break-even = strike + premium. For a put: break-even = strike − premium. Using the tool's defaults: a Long Call at strike 150 with premium 5 breaks even at 155; a Long Put on the same strike breaks even at 145. At the break-even price the P&L is exactly zero; you only move into profit once the price moves past it in the direction of your bet.
What is the maximum loss when buying an option?
When you buy an option (Long Call or Long Put), your maximum loss is exactly the premium you paid — you cannot lose more. With the default setup, a Long Call's max loss is 5 per share even if the price falls all the way to 105. That capped downside is the key appeal of long positions, while the upside (for a call) is theoretically unlimited as the price rises.
Why does the tool show "Unlimited" max loss for short positions?
An option writer collects a fixed premium but takes on open-ended risk if the price moves against them. For a Short Call at strike 150, premium 5: at 150 you keep the full premium (+5), but at 170 you lose -15 — and the loss keeps growing with the price, with no ceiling. For a Short Put, a drop to 120 costs you -25. That is why short positions are labelled "Unlimited" max loss (a put's loss is technically capped at the price reaching zero, but it is still very large).
What is the difference between a call and a put?
A call is the right to buy the underlying at the strike — you buy calls when you expect the price to rise. A put is the right to sell at the strike — you buy puts when you expect the price to fall, or to hedge a portfolio. On the chart, a Long Call's payoff slopes up once the price clears the strike, while a Long Put's slopes up as the price falls below it. On strike 150, premium 5: at a price of 170 the Long Call earns +15; at 130 the Long Put earns +15.
Does this chart account for time value and volatility?
No. The tool plots P&L at expiration only, which is why the payoff is a simple kinked line. It ignores time value (Theta), implied volatility (Vega), interest rates, dividends and commissions. Before expiration, an option's market price moves with all of these (the Black–Scholes model captures them fully), so the real value curve is smoother. Use this diagram as an intuition sketch of the risk shape, not as a pricing engine.
What is the premium and why does it matter?
The premium is the price you pay to buy an option (or receive to write one). It shifts the entire break-even: the higher the premium, the further the price must move before you profit. For a Long Call at strike 150, a premium of 5 sets break-even at 155; a larger premium pushes it higher. The premium is also the buyer's maximum loss and the writer's maximum gain. Change the premium in the tool to watch the whole payoff line slide up or down.