Chapter 02 · Section 2.1

The horizontal axis on the profit/loss diagram

On the profit/loss diagram, the horizontal axis represents:

a) the price of the underlying asset at the time the option is purchased.
• b) the price of the underlying asset at time of expiration/exercise.
  Yes. The point of the profit/loss diagram is to see profit or loss as a function of the price the underlying asset is going to have at expiration or exercise. Continue
  c) time until expiration.
  d) the option premium.
  e) None of the above.

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