# Calls vs puts (Options 101, lesson 2 of 10)

Canonical URL: https://mrkts.gg/learn/options/calls-and-puts
Last updated: Nov 9, 2026, 9:00 AM ET

> Long and short calls and puts at expiration: P&L, breakeven, max loss and max gain, with worked examples and a few questions.

What you'll be able to do: Compute the payoff at expiration, P&L, breakeven, and max loss/gain for long and short calls and puts.

## What an option is worth on the last day

On expiration day there's no time left. An option is worth only what exercising it would give you right now.

1. A 50 call with the stock at 52: you can buy at 50 something worth 52, so the call is worth 2.00.
2. A 50 call with the stock at 48: nobody buys at 50 what sells for 48, so the call is worth 0.
3. A 50 put with the stock at 45: you can sell at 50 something worth 45, so the put is worth 5.00.

> **Key idea:** Call value = max(0, stock − strike). Put value = max(0, strike − stock). Profit or loss is that value minus what you paid.

## The long call

You buy the 50 call for 2.00, which is $200. Below 50 it's worth nothing, and you lose the whole $200. Between 50 and 52 it's worth something, but not enough to pay you back. Above 52 you profit.

*Payoff chart at expiration: long 50 call at 2.00. Per position: breakeven 52.00, max gain unlimited, max loss $200.* Long 50 call bought at 2.00, at expiration. Flat at a $200 loss below the strike, then up $100 for every $1 the stock gains.

1. Breakeven = strike + premium.
2. 50 + 2.00 = 52.
3. Every dollar above 52 adds $100 of profit per contract.

## The long put

You buy the 50 put for 1.80, which is $180. It gains value as the stock falls below 50, and it breaks even at 50 − 1.80 = 48.20.

*Payoff chart at expiration: long 50 put at 1.80. Per position: breakeven 48.20, max gain $4,820, max loss $180.* Long 50 put bought at 1.80, at expiration. Flat at a $180 loss above the strike, then up $100 for every $1 the stock falls.

The most you can make is if the stock goes to zero: (50 − 1.80) × 100 = $4,820.

> **Watch out:** A put doesn't profit on any drop. If the stock falls from 50 to 49, the put is worth 1.00 and you've paid 1.80, so you're down $80.

## Sellers take the other side

A seller's chart is the buyer's chart flipped upside down. The seller of the 50 put for 1.80 keeps up to $180 if the stock stays above 50.

*Payoff chart at expiration: short 50 put at 1.80. Per position: breakeven 48.20, max gain $180, max loss $4,820.* Short 50 put sold at 1.80, at expiration. The seller keeps $180 above the strike and loses $100 for every $1 the stock falls below 48.20.

The seller of the 50 call for 2.00 keeps up to $200 if the stock stays below 50. Above 52 the loss keeps growing as the stock climbs.

*Payoff chart at expiration: short 50 call at 2.00. Per position: breakeven 52.00, max gain $200, max loss unlimited.* Short 50 call sold at 2.00, at expiration, with no shares owned. The line keeps falling to the right because a stock has no ceiling.

> **Watch out:** A short put can lose up to $4,820 here. An uncovered short call can lose without limit. Owning 100 shares covers the call: the shares gain what the call loses.

## Calls and puts side by side

| Long 50 call (paid 2.00) | Long 50 put (paid 1.80) |
| --- | --- |
| Profits when the stock rises | Profits when the stock falls |
| Breakeven: 52.00 | Breakeven: 48.20 |
| Max loss: $200 | Max loss: $180 |
| Max gain: no limit | Max gain: $4,820 |

> **Tip:** These are expiration numbers. Before expiration an option still has time value, so a position below breakeven isn't necessarily losing yet.

## Worked example: Four positions on a $50 stock

*Illustrative numbers, not real quotes.*

Take a $50 stock with the 50 call at 2.00 and the 50 put at 1.80. Walk through the long call first:

- Premium 2.00 × 100 = $200 paid. That is the most you can lose.
- Breakeven: strike 50 + premium 2.00 = 52.
- At 52 the call is worth 2.00, which is what you paid. Above 52 you profit, dollar for dollar.

Now the same steps for all four positions. Each cell is the P&L per contract at expiration:

| Stock at expiration | Long 50 call (2.00) | Long 50 put (1.80) | Short 50 put (1.80) | Short 50 call (2.00) |
| --- | --- | --- | --- | --- |
| 40 | −$200 | +$820 | −$820 | +$200 |
| 45 | −$200 | +$320 | −$320 | +$200 |
| 48.20 | −$200 | $0 | $0 | +$200 |
| 50 | −$200 | −$180 | +$180 | +$200 |
| 52 | $0 | −$180 | +$180 | $0 |
| 55 | +$300 | −$180 | +$180 | −$300 |
| 60 | +$800 | −$180 | +$180 | −$800 |

And the limits for each position:

| Position | Premium | Breakeven | Max loss | Max gain |
| --- | --- | --- | --- | --- |
| Long 50 call | 2.00 | 52.00 | $200 | Unlimited |
| Long 50 put | 1.80 | 48.20 | $180 | $4,820 |
| Short 50 put | 1.80 | 48.20 | $4,820 | $180 |
| Short 50 call (uncovered) | 2.00 | 52.00 | Unlimited | $200 |

- Every short position is the mirror image of the long one on the same strike.
- The put's max gain comes from the stock going to zero: (50 − 1.80) × 100 = $4,820.

## Practice

The page has 7 practice questions and 5 mastery checks for this lesson, with feedback on each wrong answer: https://mrkts.gg/learn/options/calls-and-puts

Next lesson: [Premium, intrinsic and extrinsic value, moneyness](https://mrkts.gg/learn/options/premium-and-moneyness.md)

Education only, not investment advice. Example numbers are illustrative, not real quotes.

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