Payoff for Call Buyer Calculator

✖Price of Underlying at Expiration refers to the value of the underlying asset of a financial derivative, such as a stock, commodity, or currency, at the time the derivative contract expires.ⓘ Price of Underlying at Expiration [S_T]			+10% -10%
✖The Exercise Price, also known as the strike price, is the predetermined price at which the owner of a financial derivative, such as an option or a warrant, can buy or sell the underlying asset.ⓘ Exercise Price [X]			+10% -10%

✖The Payoff for Call Buyer, also known as the long call position, refers to the profit or loss realized by the buyer of a call option at expiration, based on the price of the underlying asset.ⓘ Payoff for Call Buyer [PCB]

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Formula

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Payoff for Call Buyer

Formula

`"PCB" = max(0,"S"_{"T"}-"X")`

Example

`"3"=max(0,"29"-"26")`

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Payoff for Call Buyer Solution

STEP 0: Pre-Calculation Summary

Formula Used

Payoff for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)
PCB = max(0,S_T-X)
This formula uses 1 Functions, 3 Variables

Functions Used

max - Maximum of a function is the highest value that the function can output for any possible input., max(a1, …, an)

Variables Used

Payoff for Call Buyer - The Payoff for Call Buyer, also known as the long call position, refers to the profit or loss realized by the buyer of a call option at expiration, based on the price of the underlying asset.
Price of Underlying at Expiration - Price of Underlying at Expiration refers to the value of the underlying asset of a financial derivative, such as a stock, commodity, or currency, at the time the derivative contract expires.
Exercise Price - The Exercise Price, also known as the strike price, is the predetermined price at which the owner of a financial derivative, such as an option or a warrant, can buy or sell the underlying asset.

STEP 1: Convert Input(s) to Base Unit

Price of Underlying at Expiration: 29 --> No Conversion Required
Exercise Price: 26 --> No Conversion Required

STEP 2: Evaluate Formula

Substituting Input Values in Formula

PCB = max(0,S_T-X) --> max(0,29-26)

Evaluating ... ...

PCB = 3

STEP 3: Convert Result to Output's Unit

3 --> No Conversion Required

FINAL ANSWER

3 <-- Payoff for Call Buyer

(Calculation completed in 00.004 seconds)

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Created by Kashish Arora

Satyawati College (DU), New Delhi

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< 14 Forex Management Calculators

Black-Scholes-Merton Option Pricing Model for Call Option

Go Theoretical Price of Call Option = Current Stock Price*Normal Distribution*(Cumulative Distribution 1)-(Option Strike Price*exp(-Risk Free Rate*Time to Expiration of Stock))*Normal Distribution*(Cumulative Distribution 2)

Cumulative Distribution One

Go Cumulative Distribution 1 = (ln(Current Stock Price/Option Strike Price)+(Risk Free Rate+Volatile Underlying Stock^2/2)*Time to Expiration of Stock)/(Volatile Underlying Stock*sqrt(Time to Expiration of Stock))

Fama-French Three-Factor Model

Go Excess Return on Asset = Asset Specific Alpha+Beta in Forex*(Return on Market Portfolio-Risk Free Rate)+(Sensitivity of the Asset to SMB*Small Minus Big+Sensitivity of the Asset to HML+Error Term)

Vasicek Interest Rate

Go Derivative of Short Rate = Speed of Mean Reversal*(Long Term Mean-Short Rate)*Derivatives*Time Period+Volatility at Time*Derivatives*Random Market Risk

Black-Scholes-Merton Option Pricing Model for Put Option

Go Theoretical Price of Put Option = Option Strike Price*exp(-Risk Free Rate*Time to Expiration of Stock)*(-Cumulative Distribution 2)-Current Stock Price*(-Cumulative Distribution 1)

Forward Rate

Go Forward Rate = Spot Exchange Rate*ln((Domestic Interest Rate-Foreign Interest Rate)*Time to Maturity)

Cumulative Distribution Two

Go Cumulative Distribution 2 = Cumulative Distribution 1-Volatile Underlying Stock*sqrt(Time to Expiration of Stock)

Position Size in Forex

Go Position Size in Forex = (Account Equity*Risk Percentage in Forex)/(Stop Loss in Pips*Pip Value in Forex)

Profit for Call Buyer

Go Profit for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)-Call Premium

Interest Rate Parity

Go Forward Rate Constant = Spot Exchange Rate*((1+Interest Rate of Quote Currency)/(1+Interest Rate of Base Currency))

Gordon Growth Model

Go Current Stock Price = (Dividend Per Share)/(Required Rate of Return-Constant Growth Rate of Dividend)

Payoff for Call Buyer

Go Payoff for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)

Purchasing Power Parity Theory using Inflation

Go Exchange Rate Factor = ((1+Inflation in Home Country)/(1+Inflation in Foreign Country))-1

Intrinsic Value

Go Intrinsic Value = Share Price-Base Value

Payoff for Call Buyer Formula

Payoff for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)
PCB = max(0,S_T-X)

What is Payoff for Call Buyer?

The payoff for a call buyer, also known as the long call position, refers to the profit or loss that the buyer of a call option realizes at expiration based on the price of the underlying asset. The payoff depends on the relationship between the market price of the underlying asset at expiration and the exercise price of the call option.

How to Calculate Payoff for Call Buyer?

Payoff for Call Buyer calculator uses Payoff for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price) to calculate the Payoff for Call Buyer, The Payoff for Call Buyer formula is defined as the long call position, refers to the profit or loss that the buyer of a call option realizes at expiration based on the price of the underlying asset. Payoff for Call Buyer is denoted by PCB symbol.

How to calculate Payoff for Call Buyer using this online calculator? To use this online calculator for Payoff for Call Buyer, enter Price of Underlying at Expiration (S_T) & Exercise Price (X) and hit the calculate button. Here is how the Payoff for Call Buyer calculation can be explained with given input values -> 3 = max(0,29-26).

FAQ

What is Payoff for Call Buyer?

The Payoff for Call Buyer formula is defined as the long call position, refers to the profit or loss that the buyer of a call option realizes at expiration based on the price of the underlying asset and is represented as PCB = max(0,S_T-X) or Payoff for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price). Price of Underlying at Expiration refers to the value of the underlying asset of a financial derivative, such as a stock, commodity, or currency, at the time the derivative contract expires & The Exercise Price, also known as the strike price, is the predetermined price at which the owner of a financial derivative, such as an option or a warrant, can buy or sell the underlying asset.

How to calculate Payoff for Call Buyer?

The Payoff for Call Buyer formula is defined as the long call position, refers to the profit or loss that the buyer of a call option realizes at expiration based on the price of the underlying asset is calculated using Payoff for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price). To calculate Payoff for Call Buyer, you need Price of Underlying at Expiration (S_T) & Exercise Price (X). With our tool, you need to enter the respective value for Price of Underlying at Expiration & Exercise Price and hit the calculate button. You can also select the units (if any) for Input(s) and the Output as well.

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