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Locate the missing initiation movement
The original long call has strike 100, premium 6 and terminal price 103. A report labels max(103−100,0)=3 as profit. It has computed payoff and omitted the paid cost.
Add the signed premium record
The holder’s initiation cash is −6 and expiry receipt +3. Their simple sum is −3. If the intended measure is discounted or funded profit, additional timing inputs are needed; simply dropping premium still does not answer it.
| Computation | Correct label |
|---|---|
| max(103−100,0)=3 | Holder payoff |
| 3−6=−3 | Simple unfinanced profit |
Check the change in the zero point
The contract payoff becomes positive above strike 100. With positive premium 6, simple profit crosses zero at 106. A payoff curve’s kink therefore cannot be used as the profit crossing without including cost.
Keep the repair specific
The error concerns a missing cost and a wrong label. It does not show that the terminal scenario was incorrectly supplied or that the option’s current market value is 3. Retain the measurement date and purpose.