💰 Profit at Expiration

Multi-leg option strategies combine two or more option contracts to create a tailored risk/reward profile. At expiration, the net profit is determined by the final price of the underlying asset and the payoff of each leg.

📈 How Profit Is Calculated

Profit = Total Payoff from All Legs − Net Premium Paid (or + Net Credit Received)
Each leg contributes a payoff based on its type (call/put), strike price, and position (long/short)
Final profit is realized only at expiration, assuming no early exercise or assignment

🧮 Example: Bull Call Spread

Leg	Type	Strike	Premium	Payoff at Expiration
Leg 1	Long Call	$100	$5	Max: $Underlying − $100
Leg 2	Short Call	$110	$2	Max: −($Underlying − $110)

Net Premium Paid: $5 − $2 = $3

Max Profit: $10 − $3 = $7 (if underlying ≥ $110)

Max Loss: $3 (if underlying ≤ $100)

📊 Visualization

Profit/loss at expiration is typically shown as a line chart with:

X-axis: Underlying asset price
Y-axis: Net profit or loss
Break-even point: Where net profit = $0

🧠 Pro Tip

Use payoff diagrams and scenario analysis to understand how each leg contributes to final profit. Tools like multi-leg calculators can automate this process and display margin, breakeven, and Greeks.