--- title: "How do I read a payoff diagram | RupeeCase" description: "A payoff diagram plots the profit or loss at expiry on the vertical axis against the index level on the horizontal axis." source_url: "https://www.rupeecase.com/learn/questions/how-to-read-payoff-diagram" --- A bull call spread has a flat floor, a slope between its strikes and a flat ceiling Profit and loss at expiry for one bought call and one sold call on one lot of 65 units, on the 30 Jun 2026 chain at the settle prices of 10 Jun 2026. The lower strike is the one nearest the future. Source: NSE end of day data, computed by RupeeCase. As of 10 Jun 2026. Here is one diagram from the 10 Jun 2026 Nifty chain: a bull call spread, which buys a call at the strike nearest the future and sells a higher call. The horizontal axis is the index at expiry, and the vertical axis is the profit or loss in rupees on one lot of 65 units. Step one is the flat ends. On the left both calls expire worthless, so the loss is the net premium paid and it stops growing. On the right the sold call offsets the bought one, so the profit stops growing too. Step two is the bends. The line starts to rise at the lower strike and levels off at the upper one. The slope between them is the part of the trade that depends on the index. Step three is the crossing with zero. That is the breakeven, and it sits above the lower strike by the net premium. The diagram is drawn at expiry, so it leaves out time value, and a position closed earlier can show a different line. The same reading works for any combination of legs. Buying and selling the same pair give mirror diagrams, as the [buying against selling](/learn/questions/option-buying-vs-selling) question shows. The payoff builder redraws any diagram for any chain, as a teaching tool. **Before you trade.** Derivatives trading carries a high risk of loss. SEBI's study "Profitability of Individual Traders in the Equity Derivatives Segment (FY25 to FY26)" (August 2026) found that 87.7% of individual traders in equity F&O made net losses in FY26, with aggregate net losses of Rs 91,685 crore. [Read the SEBI study](https://www.sebi.gov.in/reports-and-statistics/research/aug-2026/study-profitability-of-individual-traders-in-the-equity-derivatives-segment-fy25-fy26-_103835.html) How do I read a payoff diagram?A payoff diagram plots the profit or loss at expiry on the vertical axis against the index level on the horizontal axis. Read it in three steps: the flat ends are the limits, the bends are the strikes, and the crossing with zero is the breakeven. LGo deeper ## Where Learn teaches this. [Go deeperReading and building payoff diagrams7 min, Beginner](/learn/path-17/module-17-1-payoff-diagrams)[Go deeperVertical debit spreads: bull call and bear put8 min, Beginner](/learn/path-17/module-17-2-bull-call-and-bear-put-spreads)[Try itPayoff builderLegs from a dated chain, the expiry and before expiry curves, breakevens and the charges.](/learn/tools/payoff-builder) SSources ## Go to the source. 2 sources, NSE the most cited The publisher of each source listed below. Source: Module undefined source list. 1. [NSE, equity derivatives contract specifications (instruments, expiry, lot size and settlement)](https://www.nseindia.com/static/products-services/equity-derivatives-contract-specifications) NSE 2. [SEBI investor education, Understanding derivatives](https://investor.sebi.gov.in/understanding_derivatives.html) SEBI ?Questions people ask ## Related questions. [QuestionOption buying or option selling: which is better?Beginner, trap check](/learn/questions/option-buying-vs-selling)[QuestionWhat are futures and options (F&O kya hai)?Beginner](/learn/questions/what-are-futures-and-options)[QuestionITM, ATM, OTM: what is intrinsic value and what is time value?Beginner](/learn/questions/itm-atm-otm-explained)[QuestionCan an option buyer lose more than the premium, and can I hold options to expiry?Beginner](/learn/questions/can-option-buyer-lose-more) [All 130 questions](/learn/questions/) Explore next ## Go deeper on this question. * [QuestionStraddle or strangle: what is the difference?A short answer with a dated chart](/learn/questions/straddle-vs-strangle) * [QuestionCan option selling give a "daily income"?A short answer with a dated chart](/learn/questions/option-selling-daily-income) * [GlossaryInvesting glossary, 230 termsPlain word definitions, and the app’s own](/learn/glossary) Community ## Join my WhatsApp group. Scan the code, fillFill one short form, and join my WhatsApp group. Slides, sources, factsheets and the rebalance logs live there, and members join a daily Google Meet with me. New to RupeeCase? [Getting started](/getting-started) [See the terminal](/terminal) [Sign up for RupeeCase](https://invest.rupeecase.com/signup) [Join the WhatsApp group](https://forms.gle/C6HMtM1Z2GfeocQV7) [One form, one group](https://forms.gle/C6HMtM1Z2GfeocQV7)Scan with your phone camera Education only, not investment advice, a research report or a recommendation to buy, sell or hold any security. RupeeCase (QC Alpha Technologies Pvt Ltd) is not registered with SEBI as an investment adviser or research analyst. Contracts and prices shown are for illustration only, come from NSE end of day files at least 30 days old, and are not recommendatory. Derivatives trading carries a high risk of loss.