How to read an option payoff chart: expiry, T+0 and T+N curves

One position, drawn several ways: what it pays at expiry, what it is worth today, and what it is likely to be worth on the days in between.

The expiry curve and the today curve

The solid line is the payoff at expiry: what the position is worth on the last day, when every option is reduced to its intrinsic value. It is green where the position makes money and red where it loses, and it crosses zero at the breakevens, which are marked on the chart beside the spot line. The dashed line, labelled Today (T+0), is the same position valued now, with time value still in every option. The gap between the two lines is the time value that will leave the position between now and expiry. Hover the chart to read the P&L at any price, on the target date and at expiry.

T+N curves: time decay you can see

Turn on T+N in the toolbar above the chart and up to four more curves appear, each the same position valued a set number of days from now. The days are spaced evenly across the time left to expiry, so a weekly contract and a monthly one both get a useful spread rather than a fixed T+1 or T+5 that may fall after expiry. The curves fade as they approach expiry. For a position that sells premium, watching them drift towards the expiry line is watching theta work; for one that buys premium, it is watching the cost of waiting.

Probability of profit and the σ bands

• Probability of profit. Shown as POP beside the maximum profit, maximum loss, margin and breakevens, and marked as an estimate. It is a model figure: the share of a lognormal price distribution, set by implied volatility and the time to expiry, that lands where the expiry payoff is positive. It is not a forecast and not a measured frequency.
• ±1σ and ±2σ bands. The σ bands button shades the price ranges one and two standard deviations from spot at expiry, taken from the at-the-money implied volatility on the chain, with the implied price distribution drawn faintly behind the curve. They show how far the market's own pricing says the index could reasonably travel, next to where the position makes and loses money.
• Breakevens and spot. Each has its own toolbar switch, so a crowded chart can be thinned to the lines you are reading.

What happens if: move the price, the volatility and the date

Beside the chart, three sliders move the target price of the underlying up or down, shift implied volatility, and roll the date forward towards expiry. The dashed curve and an Estimated P&L figure follow them, and the chart says plainly when a what-if is on, so a modelled position is never read as the live one. One reset puts everything back to the market.

The payoff table and the Greeks tab

The Payoff table tab reads the same two curves at a ladder of target prices, on an interval you choose, with the current price in place and a row at each breakeven. It is the chart as numbers, and because it is read from the chart's own curves the two cannot disagree. The Greeks tab lists Delta, Gamma, Theta and Vega leg by leg, per unit or for the whole position, and the net Greeks sit beside the chart. The Greeks guide explains what each one measures.

What the curves cannot tell you

Every curve before expiry is a model valuation: options priced with today's implied volatility, held where you set it. Real volatility moves, skew changes, and a far strike can reprice very differently from the model after a large move. The data is NSE's, 15 minutes behind the market. Probability of profit describes a distribution, not the next session, and a high figure often comes with a large loss in the cases it leaves out. Read the maximum loss beside it.

Payoff chart questions

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Educational analytics only: not investment advice. You are responsible for your own trading decisions.