Payoff

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Payoff

Meaning

Payoff is the final profit or loss that an investor or trader gets from a trade or financial contract after it ends. In simple terms, the payoff is the outcome of your decision, which can be either a profit or a loss.

Example :

For instance, if you buy a stock at ₹100 and sell it at ₹130, your payoff is +₹30.If you buy a call option and the price goes above the strike price, you make a profit; if it stays below, your loss is limited to the premium you paid.

How to Understand :

1. Payoff helps you see all possible outcomes of a trade, including where you can make a profit, where you might lose money, and where you break even (neither profit nor loss).

2. Payoff diagrams can help you visualize how changes in price affect your profit or loss.

3. Understanding payoff helps you compare different trading strategies based on what you expect to happen in the market.

Importance :

1. It serves to protect bank accounts and digital payment systems from unauthorized transactions.

2. A PIN verifies that the individual executing the transaction is duly authorized.

3. It mitigates the risk of fraud, even in instances where a card or mobile device is lost or compromised.

4. PINs are extensively utilized in ATMs, UPI transactions, digital wallets, point-of-sale terminals, and for the security of SIM cards.

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Disclaimer

< Back

Payoff

Meaning

Payoff is the final profit or loss that an investor or trader gets from a trade or financial contract after it ends. In simple terms, the payoff is the outcome of your decision, which can be either a profit or a loss.

Example :

For instance, if you buy a stock at ₹100 and sell it at ₹130, your payoff is +₹30.If you buy a call option and the price goes above the strike price, you make a profit; if it stays below, your loss is limited to the premium you paid.

How to Understand :

Importance :