Options payoff diagram builder
A payoff diagram plots what a position is worth at expiration across every possible share price. Add legs, long or short, calls, puts or shares, and the curve, the break-evens and the net credit or debit update as you type.
How to read the curve
The horizontal axis is the share price at expiration. The vertical axis is your profit or loss in dollars. Where the line crosses zero is a break-even. Flat sections are capped outcomes, and a flat section on the right is the signature of a covered call: you stop making money above the strike.
The page starts loaded with a covered call, long 100 shares at 71.40 and short the 75 call for 0.62, because that shape is the one worth learning first. Change the short call to a short put and watch the whole curve flip to the other side.
What the diagram does not show
This is expiration, and only expiration. Before then the curve is a smooth arc sitting above the hard line wherever extrinsic value remains, which is why a position showing an unrealized loss at week two can still expire at max profit. Beginners close positions because the mark looks bad. The mark is not the payoff.
It also ignores commissions, early assignment and dividends. On a short call around an ex-dividend date, early assignment is the risk that actually shows up, and no payoff chart will warn you about it.
Shapes worth building
- Covered call. Long 100 shares, short 1 call. Flat ceiling, full downside.
- Cash-secured put. Short 1 put. Same shape as the covered call, less capital, no dividend.
- Poor man's covered call. Long a deep ITM call far out, short a near-dated call. Cheaper, and the curve shows you exactly what you gave up.
- Credit spread. Short one option, long another further out. The long leg turns an open-ended loss into a known one, and the chart makes the trade-off obvious in a way a table never does.
Questions people actually ask
Why does my short put show a loss all the way to zero?
Because that is what it does. A short put loses money linearly from the break-even down to a share price of zero. The chart clips at the left edge of the plotted range, but the line keeps going. That is the max loss the payoff builder cannot draw for you on one screen.
Can I model a position before expiration?
Not on this page. The diagram is the expiration payoff, which is the shape that decides the trade. For a mid-life valuation use the Black-Scholes calculator, which prices a contract at any point in its life.
What does the net credit number mean?
Cash into your account when you open the position, minus cash out. Short legs pay you, long legs and shares cost you. A positive number means you were paid to open the trade, which is the defining feature of a premium-selling position.