All lessons

Understand crypto before trading

1What is crypto trading? 2Blockchains, ledgers and consensus 3Bitcoin, Ethereum, coins and tokens 4Build a safe practice plan

Wallets and personal security

5Wallets, keys and custody 6Recovery phrases and backups 7Networks, addresses and transfers 8Phishing, approvals and scams

Understand the trading venue

9Centralized and decentralized venues 10Pairs, order books and spreads 11Spot orders and execution 12Fees, slippage and liquidity

Risk before returns

13Size a spot position 14Portfolio concentration and correlations 15Drawdown, R multiples and expectancy 16Stablecoins and counterparty risk

Read crypto market structure

17Candles and an around-the-clock market 18Trends, ranges and price levels 19Breakouts, volume and confirmation 20Indicators and volatility

Apply chart frameworks to crypto

21Dow-style structure: what would change your view? 22Wyckoff in spot crypto: read the range carefully 23Elliott counts: keep an alternative on the page 24Liquidity sweeps: separate the wick from the story 25FVG and OTE: transfer the rules, not the promises

Understand asset economics

26Supply, market cap and FDV 27Token unlocks and distribution 28Network activity and on-chain data 29Research a project critically

Understand derivatives before considering them

30Spot, futures and perpetual contracts 31Funding, basis and mark price 32Margin, leverage and liquidation 33Open interest and liquidation data

Derivatives through paper examples

34Linear perpetual P&L: calculate the money, not the excitement 35Collateral and liquidation: a deliberately simplified worksheet 36Funding carry: count what you keep 37Dated futures: follow both sides of the hedge 38Calls and puts: payoff is not profit

Explore DeFi with caution

39Smart contracts and applications 40AMM pools and price impact 41Liquidity provision and changing asset value 42Staking, lending and bridges

Understand ecosystem risks

43Constant-product AMMs: calculate the moving price 44LP divergence loss: choose the right comparison 45Reorgs, bridges and L2s: what is actually final? 46MEV and arbitrage: subtract the competition 47DEX approvals: inspect before you sign

Build and test market hypotheses

48Market context and catalysts 49Write a setup rulebook 50Profiles, order flow and SMC limits 51Backtest crypto data honestly

Research, allocation and review

52Token vesting: size the unlock, then ask why 53On-chain metrics: count activity, not stories 54Stablecoin depeg: map access, not just reserves 55Rebalancing: weights change even when you do nothing 56Advanced crypto capstone: defend the whole plan

Practice, review and stay informed

57Paper trade and keep a journal 58FOMO and decision routines 59Records, local rules and changing information 60Capstone: research and risk plan

38 / 60

Calls and puts: payoff is not profit

3 min read

Being right about direction may still leave an option buyer with a loss.

Here is what we will figure out

Distinguish fully paid long-option payoff, premium and maximum loss.

A call gives its holder a contractual right linked to buying at a strike; a put is linked to selling at a strike. European options exercise at expiry, while other styles differ. Cash settlement may replace delivery, so read the actual contract.

For a fictional linear one-unit call at expiry, payoff is the greater of price minus strike or zero. A put reverses that difference. Net profit also subtracts the paid premium and costs.

A fully paid standalone long option can lose its entire premium; its loss on that option is limited to the premium plus fees. This statement does not apply to naked selling or every multi-leg or borrowed-money strategy.

Before expiry, option value also responds to remaining time and expected volatility. A price move in your direction may be too small or too late. Coin-settled products require their own currency conversion and multiplier rules.

Let’s work through it

Identify type, strike, expiry, multiplier and settlement currency.
Calculate expiry payoff before subtracting premium.
Separate long-option loss limits from selling risk.

Let’s use numbers · hypothetical example

A fictional one-unit call has strike 100 and premium 6. At expiry price 120, payoff is 20 and profit is 14 before fees; at 95, payoff is zero and loss is 6. A one-unit put with strike 100 and premium 5 at price 80 pays 20, yielding 15 before fees.

Easy mistakes to watch for

Calling an in-the-money payoff a net profit.
Applying a linear example to inverse settlement unchanged.
Assuming long and short options have the same loss bound.

Keep in mind

These linear cash examples are not a trading quote or a formula for every crypto option. Sellers can face losses far beyond received premium.

Your turn

Calculate the call result at expiry 104, then identify its no-fee breakeven. Explain why a positive payoff may still mean a loss.

A quick check before we move on

At expiry 104, what is the example call's result before fees?

A loss of 2
A profit of 4
A loss of 100

Check answer

A loss of 2 Payoff is 104 − 100 = 4; subtracting premium 6 leaves −2.

Sources and further reading

Content reviewed: 29 October 2026