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Put option payoff calculator

By Jude Wallis

A long put's expiry profit per share is the greater of strike minus spot or zero, minus premium. At $40 spot, $45 strike and a $1.50 premium, intrinsic value is $5 and profit is $3.50.

Long put profit per share

$3.50

Intrinsic value $5.00 at expiry.

Spot
$40.00
Intrinsic value
$5.00
Profit after premium
$3.50
$

Underlying price at expiry, per share.

$

Price the put buyer may sell the underlying at.

$

Premium per share paid for the long put.

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The formula

max⁡(K−S,0)−p\max(K-S,0)-p

KK is strike, SS is spot at expiry, and pp is premium paid per share.

Strike above spot creates intrinsic value

At a $45 strike and $40 spot, the put has $5 of intrinsic value. Subtract the $1.50 premium to get $3.50 profit. How put options work explains the contract.

The zero floor

At a $48 spot and $45 strike, strike minus spot is negative. Intrinsic value is $0 and the $1.50 premium makes profit negative $1.50.

Per share identity

The formula is per share. A put option is tied to an underlying asset.

Scope of the payoff

This is an expiry payoff for a long put before fees and tax. It is an identity, not a forecast of the underlying price. This is educational material, not financial advice.

Worked examples

\$40 spot and \$45 strike

Spot at expiry is $40, strike is $45, and premium is $1.50 per share. What are intrinsic value and profit?

  1. Intrinsic value is max⁡(45−40,0)=5\max(45-40,0)=5, so $5.
  2. Profit is 5−1.5=3.55-1.5=3.5, so $3.50 per share.

At $40 spot, $45 strike and $1.50 premium, intrinsic value is $5 and long put profit is $3.50.

\$48 spot and \$45 strike

Spot at expiry is $48, strike is $45, and premium is $1.50 per share. What are intrinsic value and profit?

  1. Intrinsic value is max⁡(45−48,0)=0\max(45-48,0)=0, so $0.
  2. Profit is 0−1.5=−1.50-1.5=-1.5, a loss of $1.50 per share.

At $48 spot, $45 strike and $1.50 premium, intrinsic value is $0 and long put profit is negative $1.50.

Reversing strike and spot

A put's intrinsic value starts with strike minus spot. Spot minus strike is the call identity.

Common questions

Can intrinsic value be negative?

No. The maximum function floors intrinsic value at zero.

Is this buyer or seller profit?

It is the long put buyer's profit per share at expiry.

Is this financial advice?

No. It is educational material for an expiry payoff identity.

Keep reading

This page is educational material, not financial advice. The figures come from the formula shown and assume the inputs you enter hold for the whole term. Your own rate, fees, taxes and timing will differ, so treat the output as arithmetic to check a decision against, not as a recommendation.