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Read the original one-unit record
The holder pays 6 at initiation. The fictional terminal price is 103 and the strike is 100. The example ignores financing and costs, and computes an expiry cash-equivalent settlement amount.
Calculate the contract amount
Call holder payoff is max(103−100,0) = 3. The option is in the money because the terminal price exceeds the strike. That classification says nothing about whether the premium has been recovered.
Subtract the paid premium
Simple profit is 3−6 = −3. At S = 106, payoff becomes 6 and simple profit zero. At S = 110, payoff is 10 and simple profit 4.
| Terminal price | Payoff | Simple profit |
|---|---|---|
| 100 | 0 | -6 |
| 103 | 3 | -3 |
| 106 | 6 | 0 |
| 110 | 10 | 4 |
Retain the period and funding boundary
These profits are simple differences, not annual returns or discounted amounts. The original paid premium and terminal payoff occur on different dates. Keep that simplification visible before using the result in a broader performance calculation.