SIMPLE PAY OFF OF CALL AND PUT OPTION.....

WHAT IS PAY OFF FOR CALL OPTION AND PUT OPTION:

Example: Nifty is expiry at 11000

pay off for call option of 10800 and put option of 11100 will be as under.

Call payoff= Current price - Strike price

11000-10800 = 200 is intrinsic value of option.

Put payoff= strike price - current price 

11100- 11000 = 100 is intrinsic value of put option.

In call option below current price will be having intrinsic value and considered In the Money on expiry 

while,

Put option above current price will be having intrinsic value on expiry and considered as In the Money option.

Exercise: 
Consider payoff of call option 
Nifty trading at 11100
Call option 10800
call option 10900
call option 11050

For put option nifty at 10970
Put option 10900
Put option 10950
Put option 11000

Do exercise to make concept clear. Comment below if you have any query and problem.

Happy reading
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