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Profit for Call Buyer Formula

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The Profit for Call Buyer, also known as the long call position, represents the net gain or loss realized by the buyer of a call option at expiration, based on the price of the underlying asset. Check FAQs

Pft = max (0, S T - X) - c 0

Pft - Profit for Call Buyer?S_T - Price of Underlying at Expiration?X - Exercise Price?c₀ - Call Premium?

Profit for Call Buyer Example

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Here is how the Profit for Call Buyer equation looks like with Values.

Here is how the Profit for Call Buyer equation looks like with Units.

Here is how the Profit for Call Buyer equation looks like.

1.5 = max (0, 29 - 26) - 1.5

1.5 = max (0, 29 - 26) - 1.5

1.5 = max (0, 29 - 26) - 1.5

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Profit for Call Buyer Solution

Follow our step by step solution on how to calculate Profit for Call Buyer?

FIRST Step Consider the formula

Pft = max (0, S T - X) - c 0

Next Step Substitute values of Variables

∴

Pft = max (0, 29 - 26) - 1.5

Next Step Prepare to Evaluate

∴

Pft = max (0, 29 - 26) - 1.5

LAST Step Evaluate

∴

Pft = 1.5

Profit for Call Buyer Formula Elements

Variables

Functions

Profit for Call Buyer

The Profit for Call Buyer, also known as the long call position, represents the net gain or loss realized by the buyer of a call option at expiration, based on the price of the underlying asset.

Symbol: Pft

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Profit for Call Buyer

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.

Symbol: S_T

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Price of Underlying at Expiration

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.

Symbol: X

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Exercise Price

Call Premium

Call Premium is the price paid by the buyer of a call option to the seller in exchange for the right to buy the underlying asset at a specified price on or before the expiration date of the option.

Symbol: c₀

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Call Premium

max

Maximum of a function is the highest value that the function can output for any possible input.

Syntax: max(a1, …, an)

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Go Cumulative Distribution One

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Go Cumulative Distribution Two

D 2 = D 1 - v us \cdot \sqrt{t s}

Go Black-Scholes-Merton Option Pricing Model for Call Option

C = P c \cdot P normal \cdot (D 1) - (K \cdot \exp (- R f \cdot t s)) \cdot P normal \cdot (D 2)

Go Black-Scholes-Merton Option Pricing Model for Put Option

P = K \cdot \exp (- R f \cdot t s) \cdot (- D 2) - P c \cdot (- D 1)

How to Evaluate Profit for Call Buyer?

Profit for Call Buyer evaluator uses Profit for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)-Call Premium to evaluate the Profit for Call Buyer, The Profit for Call Buyer formula is defined as the long call position, represents the net gain or loss realized by the buyer of a call option at expiration, based on the price of the underlying asset. Profit for Call Buyer is denoted by Pft symbol.

How to evaluate Profit for Call Buyer using this online evaluator? To use this online evaluator for Profit for Call Buyer, enter Price of Underlying at Expiration (S_T), Exercise Price (X) & Call Premium (c₀) and hit the calculate button.

FAQs on Profit for Call Buyer

What is the formula to find Profit for Call Buyer?

The formula of Profit for Call Buyer is expressed as Profit for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)-Call Premium. Here is an example- 1.5 = max(0,29-26)-1.5.

How to calculate Profit for Call Buyer?

With Price of Underlying at Expiration (S_T), Exercise Price (X) & Call Premium (c₀) we can find Profit for Call Buyer using the formula - Profit for Call Buyer = max(0,Price of Underlying at Expiration-Exercise Price)-Call Premium. This formula also uses Maximum Value Function function(s).

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Profit for Call Buyer Formula

Profit for Call Buyer Example

Profit for Call Buyer Solution

Profit for Call Buyer Formula Elements

Other formulas in Forex Management category

How to Evaluate Profit for Call Buyer?

FAQs on Profit for Call Buyer

Variable Name