Options Basics

Profit and Loss Diagrams

Profit and loss diagrams are visual aids that display where an options strategy will make or lose money at expiration based on the underlying asset’s price. Profit and loss diagrams illustrate the potential outcomes of a strategy, including the break-even points, max loss, and max gain.
Profit and Loss Diagrams
Kirk Du Plessis
Apr 19, 2021

As we continue through all of our training videos you'll see many different types of P&L diagrams. These diagrams help build context around when an option strategy will make or lose money. Once you learn to understand the basics of how these profit and loss diagrams work you can visually see the profit areas and get creative in how you build your strategy. These are incredibly useful aids to our discussion of options trading and I highly suggest you learn to understand them now before moving forward.

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