Figure-1 depicts the:
A) position diagram for the buyer of a call option
B) profit diagram for the buyer of a call option
C) position diagram for the buyer of a put option
D) profit diagram for the buyer of a put option

Question

Figure-1 depicts the: 
A) position diagram for the buyer of a call option 
B) profit diagram for the buyer of a call option 
C) position diagram for the buyer of a put option 
D) profit diagram for the buyer of a put option

Quizplus · Accepted Answer

Figure-1 is a profit diagram for the buyer of a call option. It shows the potential profit or loss at expiration for different underlying asset prices. The profit is maximized when the underlying asset price is higher than the strike price plus the premium paid for the option. The loss is limited to the premium paid for the option.

Figure-1 Depicts The