Options

A put is the right to sell at the strike price.  A call option is the right to buy.  Why don’t we just have one option, and talk about either selling it (in the case of a put) or buying it (in the case of call)?  This is how we do it with a futures contract, why not an option?

futures = binding agreement, both sides obligated to transact

options = right to buy or sell, one side can transact

What is the difference between an option payoff diagram and an option profit diagram?

option payoff - final value of deal at expiration (whole)

option profit - shows gain or loss, includes initial cost

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