Before building any strategy, it helps to understand the basic pieces. This page explains the essentials and how to read the payoff diagram the calculator draws.
An option gives the right (not the obligation) to buy or sell an asset at a fixed price (the strike) until a date (the expiration). The buyer pays a premium; the seller collects it.
A call gives the right to buy at the strike — it gains value when the asset rises. A put gives the right to sell at the strike — it gains value when the asset falls.
A structure is a debit when you pay to open it (the typical case for a purchase), and a credit when you collect a net premium. Credit trades usually have time on their side; debit trades need the move to happen.
The underlying price at which the trade makes neither profit nor loss. Above or below it the result turns positive or negative, depending on the strategy. In the calculator it shows as the dashed gold line.
The horizontal axis is the underlying price at expiration; the vertical axis is your result. Green is profit, red is loss, and gold ticks mark the strikes. The shape of the curve sums up the trade's risk at a glance.
Bets on a rise with capped risk and reward, paying a debit.
CreditBets on a rise or sideways move while collecting a credit.
Bets on a drop or sideways move while collecting a credit.
DebitBets on a drop with capped risk and reward, paying a debit.
Profits from the underlying pinning a central strike, with low risk.
DebitProfits when the underlying lands in a wide range between two strikes.