Chapter 02 · Section 2.1
Vertical axis on the profit/loss diagram
On the profit/loss diagram, the vertical axis represents:
f) None of the above.
Yes. In fact, the vertical axis represents the position holder's potential profit or loss at expiration, exercise or maturity (depending on whether it is a futures, options or forward position).Continue
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.
e) the option writer's profit or loss.
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