Visualizing Expiry Payoffs for Linear and Inverse Options
Summary
This overview describes a Python visualizer for plotting the combined profit and loss at expiry of one or more options. Users choose linear or inverse contracts, set the underlying price range, and enter each option’s type, premium, strike, and position size. The chart includes only options marked for inclusion, and must be replotted after changes. All options are assumed to share one expiry date.
The key unit distinction is that linear contract premiums are entered in dollars, while inverse contract premiums are entered in the base currency, such as bitcoin. Inverse-contract profit and loss is calculated in dollars but paid or received in the base currency, which changes the shape and interpretation of payoff charts. The document identifies Tkinter and Matplotlib as the interface and plotting libraries. It explains the tool’s inputs and scope, but provides no strategy performance evidence, and the visualizer shows expiry outcomes rather than interim values or multiple expiries.
Key ideas
- The visualizer combines expiry profit and loss across included options.
- Users choose a linear or inverse contract and set the underlying price range for the chart.
- Linear option premiums are entered in dollars, while inverse premiums use the base currency.
- Inverse-contract profit and loss is calculated in dollars but settled in the base currency.
- The described version assumes a shared expiry date and does not show interim profit and loss.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.