Last updated: 2026-05-04Last reviewed: 2026-05-04
Important distinction
Options can have bounded loss for buyers, but that does not make them beginner-safe. Premium decay, volatility, spread, and liquidity can make the trade lose even when the direction is partly right.Direct answer
A call gives the buyer upside exposure above a strike price. A put gives downside exposure below a strike price. The buyer pays a premium up front. At expiry, the payoff depends on where the underlying settles relative to the strike.
Terms that matter first
- Premium is the price paid for the option.
- Strike is the reference price where payoff begins.
- Breakeven is the underlying price where payoff equals premium paid.
- Intrinsic value is the immediate payoff if exercised or settled now.
- Implied volatility is the market price of expected movement, not a forecast you can blindly trust.
Options payoff calculator
Breakeven
$104
Max loss
$4.00
Max profit
Unlimited
Intrinsic value
$10.00
PnL at current
$6.00
Contract cost
$4.00
Payoff shapeBreakeven $104
This simplified calculator explains long-option payoff shape. It does not model implied volatility, exercise style, assignment, fees, spreads, funding, or venue-specific settlement.
Risk notice
Crypto perpetuals and leveraged trading are high risk. You can lose money through liquidation, funding, slippage, oracle issues, protocol failures, and market volatility.Related tools
Sources
- Cboe Options Institute: Options basicsAccessed 2026-05-04