Payoff Option Formula In King
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FAQ
The payoff function is a function u i : S 1 × S 2 × ⋯ S m → R .
A put payoff diagram explains the profit/loss from the put option on expiration and the breakeven point of the transaction. It's a pictorial representation of the possible results of your action (of buying a Put).
A payoff matrix is a type of prioritization matrix, which is a visual representation of the outcomes or payoffs of different choices made by individuals in a strategic scenario. It's a very simple 2×2 (or larger) grid in which you pit two or more possible strategie against each other and inspect every possible outcome.
An option payoff diagram is a graphical representation of the net Profit/Loss made by the option buyers and sellers. Before we begin with the explanation, it is important to note that the "Breakeven" point is the point at which you make no profit or no loss.
