Buyer payoff and the price of the right
Let S be the underlying price at settlement and K the strike. A simple call payoff per unit is max(S − K, 0); a simple put payoff is max(K − S, 0). A negative difference does not become a negative buyer payoff in this model; it becomes zero. But the buyer has already paid the premium. Economic result after the initial price of the right is therefore separate from payoff. A return would also require a stated base, time and costs.
Set K=100, call premium 7 and put premium 6. At final price 80, buyer payoffs are 0 and 20 and results after premium are −7 and +14. At 100, both payoffs are zero and results are −7 and −6. At 120, call payoff is 20 and result +13; put payoff is zero and result −6. All amounts are per one hypothetical unit; commissions, time value and financing are excluded.
The seller receives premium but accepts an obligation
In the same closed model, seller result is the buyer’s opposite result before each side’s costs. At price 120, a call seller receives 7 but owes 20, for −13. At price 80, a put seller receives 6 and pays 20, for −14. Receiving money initially is not completed profit while the obligation remains. The SEC warns of asymmetry and potentially unlimited loss for an uncovered call seller.[27](#source-cm-options) Selling a right does not make the right disappear; the obligation moves to the seller.
For an ordinary call on a non-negative asset, an unbounded rise in S can make the seller’s model obligation unbounded. For a put on such an asset, the simple model’s maximum payoff is linked to S falling toward zero and depends on K and the multiplier. This is not a maximum loss for every complex position: borrowing, other instruments and costs require separate analysis. Do not transfer the buyer’s limit in a simple premium structure to a seller or portfolio merely because both are called options.
In the money does not yet mean profit
A call with positive intrinsic value may still not cover its premium. In this model, when S is between 100 and 107, payoff is positive but buyer result before costs remains negative. This shows the difference between position relative to strike and financial result. OIC separately discusses intrinsic and time components of premium.[28](#source-cm-premium) Before completion, the option’s market price also depends on time and other factors; the terminal profile is not its current price.
Exercise and closing transaction
Selling a purchased right before expiry and exercising the right are different actions. OIC distinguishes closing a position from exercise, including dependence on style and specification.[29](#source-cm-exercise) A terminal-payoff table does not answer what cash or assets are needed for physical exercise. It does not show automatic procedures, instruction deadlines or intermediary restrictions. Read the documents, not the shape of the graph.
To check a profile, write down right type, position side, K, premium, multiplier and S moment. Calculate payoff, initial cost and result separately. [Derivatives](/guides/futures-and-options/) gives context, [charts](/guides/chart-literacy/) their limits, and [portfolio risk](/guides/portfolio-risk/) the difference between one position and aggregate obligations. This guide does not recommend buying or selling options or claim that a reader is ready for their risks.
Checking a table without trading
Calculate the same final price for both sides of one right. Before costs, buyer payoff and seller obligation must reconcile, and the premium must appear once for each side with opposite signs. If both sides become free profit, payoff and result were probably confused or the initial payment was omitted.
Ask whether the table is per unit or for the whole contract. Per-unit premium and contract payoff cannot be compared directly. Bring multiplier and quantity to one base. If the position includes other instruments, the displayed profile is no longer complete.
Class and series: identify the contract before calculating
In OIC terminology, an option class groups rights of one type—call or put—on one underlying.[10](#source-mk-oic-class) A call and put on hypothetical share X are different classes in this convention; the same issuer name does not make them one right. Other venues may use the term differently, so check the local glossary.
A series is a narrower group within a class with the same strike and expiry; OIC defines it through the expiration month.[11](#source-mk-oic-series) For practical identity, check the exact date because one month can contain different dates. X-call K=100 on December 18 and X-call K=110 on December 18 are one class but different series. X-call K=100 on December 25 is another series. X-put K=100 on December 18 is another class. These dates are fictional, not a calendar of an existing issue.
Suppose a participant buys two units of X-call-100-December 18 and sells one unit of exactly that series. The model’s net position is one long unit. Selling X-call-110-December 18 does not close the original right; two different rights/obligations remain. Equal quantity or premium does not repair a series mismatch. Multiplier, currency, exercise procedure, deliverable property and corporate-action adjustments also belong in the compatibility check. This fictional example teaches identification; it does not reconstruct a historical Gazprom option position or claim its strikes, dates, parties or result were verified.