Option Risk Profiles
The importance of a risk profile chart becomes clearer when we look at options strategies.
Consider a call option:
A call option is the right, not the obligation, to buy an asset (eg a share) at a fixed price before a predetermined date.
Let's say we want to buy a call option to buy a stock at $25.00 (strike price) before December (expiration date) and we pay 3.50 (premium) for this option.
Call Option Risk Profile
