Options Payoff Matrix
Build the expiry payoff of a two-leg options strategy across a spot grid - per-leg and total P&L, net debit, max profit, max loss and breakeven - then read the risk off a payoff diagram.
The scenario
A two-leg options strategy lands on your desk and the head trader wants the picture before it goes on the book: what does it pay at expiry, where does it break even, and what's the most it can make or lose? Build the payoff matrix across a spot grid and draw the diagram.
Where this shows up
Reading a structure's payoff, breakeven and capped risk/reward on the fly is bread-and-butter for options-trading interviews at firms of this type.
Firms such as Optiver, IMC.
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Task brief
# Options Payoff Matrix **Role relevance:** Options trading-desk take-home. **Estimated time:** 45-50 minutes · **Difficulty:** Intermediate · **Format:** Excel (.xlsx) ## What you are given - `options_payoff_matrix_starter.xlsx` - a Brief tab, a Formula Help tab, the strategy legs and a payoff-grid template. Amber cells are yours to complete. ## What you must deliver 1. Per-leg P&L at expiry across the spot grid 2. Total P&L, then net debit, max profit, max loss and the breakeven 3. A payoff diagram 4. One line interpreting the risk/reward ## Constraints - Formula-driven from the leg inputs; short legs carry a negative quantity. ## Submission note Use the Formula Help tab; the solution workbook shows every formula and the diagram.
Your tasks
- 01Compute each leg's P&L at expiry across the spot grid: Qty × (intrinsic − Premium).
- 02Sum the legs to the strategy's Total P&L at each spot.
- 03Compute the net debit, max profit, max loss (MAX/MIN) and the breakeven.
- 04Read the payoff diagram (it fills from the Total column) and write a one-line interpretation.
How you're assessed
The full points-based mark scheme is included with the pack.
What you'll learn
- How a multi-leg payoff is just the sum of its legs' payoffs.
- Why a bull call spread is defined-risk and capped-reward — and where it breaks even.
- How to read risk/reward straight off a payoff diagram.