A payoff diagram is a chart plotting an Option position’s profit or loss (y-axis) against the underlying’s price at expiry (x-axis). A Call option buyer’s payoff diagram has a distinctive “hockey stick” shape — a flat, capped loss below the strike, followed by a rising, theoretically unlimited profit line above the breakeven point.
Related Reading
See a full payoff diagram and worked example in What Is a Call Option? Buying Explained With Example.
