Payoff Diagram
A visual chart showing an options position's profit and loss across a range of underlying prices.
Formula
More Details
What is a Payoff Diagram?
A Payoff Diagram visualizes your options position's profit and loss across a range of underlying prices. It shows what happens to your P&L if the stock moves up, down, or stays flat.
Learn more: Options Greeks Guide | Options Command Center | Payoff Chart Guide | Greeks Analysis
Two Key Lines
| Line | Description |
|---|---|
| T+0 (Today) | Theoretical P&L if closed now at various prices. Includes time value. |
| At Expiration | P&L at expiration when only intrinsic value remains. The classic "kinked" profile. |
Gap Between Lines = Time Value
The difference between T+0 and Expiration lines represents extrinsic (time) value. Before expiration, options have extra value from potential future movement. At expiration, only intrinsic value remains.
As time passes, the T+0 line converges toward the Expiration line this is theta decay visualized.
Key Annotations
- Current Price Marker: Vertical line showing where the stock is now
- Breakeven Points: Where P&L crosses zero at expiration
- Max Profit/Loss Zones: Best and worst-case scenarios
Reading Payoff Shapes
| Shape | Position |
|---|---|
| Unlimited upside, limited downside | Long call |
| Limited upside, unlimited downside | Short call |
| Tent shape | Long straddle |
| Inverted tent | Short straddle |
| Capped range | Vertical spreads |
TradesViz Payoff Features
- Interactive diagram for any underlying
- T+0 and multiple expiration date lines
- Underlying selector for multi-position portfolios
- Visual breakeven and max P&L annotations
Where to find it in TradesViz
Example
Long call payoff shows max loss at premium paid, unlimited profit above strike + premium.