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Payoff at expiry for the purchase of a call option

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Description

Formula for calculating the payoff of a long position in a call option.

Formula

\[ R_{lc}=max\left ( -P+(S_{T}-K),-P \right ) \ \]

Legend

\(K\ \)        Option strike price
\(P\ \)        Value of the option premium
\(S_{T}\ \)        Price of the underlying at expiry date T of the option