Call option vs put option
By Jude Wallis
A long call is the right to buy at the strike. A long put is the right to sell at the strike. At expiry, a $60 spot against a $55 call strike and a $2 premium has $5 of intrinsic value and $3 of profit per share.
| Long call | Long put | |
|---|---|---|
| Right | To buy at the strike. | To sell at the strike. |
| Intrinsic at expiry | max(S-K, 0) | max(K-S, 0) |
| Teaching in-the-money row | Spot $60, strike $55, premium $2: profit $3. | Spot $40, strike $45, premium $1.50: profit $3.50. |
| If unused at expiry | Loss equals the premium. Spot $50 against strike $55 and premium $2 is a $2 loss. | Loss equals the premium. Spot $48 against strike $45 and premium $1.50 is a $1.50 loss. |
On this page
Opposite rights, the same floor at zero
Neither intrinsic formula goes negative. The buyer can walk away. Profit still subtracts the premium, so an in-the-money finish can still be a loss.
The call option calculator and the put option calculator are the two expiry identities. How a call option works and how a put option works are the explainers.
A put is not a short sale
Short selling borrows the asset. A long put pays a premium for a right. Asset is the underlying. This is educational material, not financial advice.
Worked examples
Call in the money
Spot is $60, strike is $55, premium is $2. What are intrinsic value and profit?
- Intrinsic is , so $5.
- Profit is $5 minus $2, which is $3.
Intrinsic value is $5. Profit is $3 per share.
Put in the money
Spot is $40, strike is $45, premium is $1.50. What are intrinsic value and profit?
- Intrinsic is , so $5.
- Profit is $5 minus $1.50, which is $3.50.
Intrinsic value is $5. Profit is $3.50 per share.
Call unused at expiry
Spot is $50, strike is $55, premium is $2. What are intrinsic value and profit?
- Intrinsic is max(50-55, 0) = 0.
- Profit is 0 minus $2, which is a $2 loss.
Intrinsic value is $0. Profit is a $2 loss per share.
Put unused at expiry
Spot is $48, strike is $45, premium is $1.50. What are intrinsic value and profit?
- Intrinsic is max(45-48, 0) = 0.
- Profit is 0 minus $1.50, which is a $1.50 loss.
Intrinsic value is $0. Profit is a $1.50 loss per share.
Common questions
Can both finish worthless?
Yes. If spot is below the call strike and above the put strike, both intrinsic values are zero and each buyer loses the premium.
Are these listed-contract multipliers?
No. Every dollar here is per share.
Is this financial advice?
No. Educational material.
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.