Chapter 02 · Section 2.1
Vertical axis on the profit/loss diagram
On the profit/loss diagram, the vertical axis represents:
e) the option writer's profit or loss.
No. Not exactly. The diagram is for both long and short positions, i.e. both for an option writer or a holder.
f) None of the above.
a) the price of the underlying asset at the time the option is purchased.
b) the exercise price.
c) the closing price of the option.
d) the option holder's profit or loss.
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