Once you're familiar with the long call position, the position of someone selling a call option referred to as having a short call position is relatively intuitive. If the call buyer is profitable, it implies a corresponding loss for the call seller, at least in the absence of any hedge. Since the long and short side are two sides of one contract and where one is winning, the other must be losing when the price of the underlying asset is below the strike price at expiration, the option holder won't exercise their option, meaning that the call seller will retain the premium in this case 7.90. However, should the assets price advance beyond the strike at expiry, the call will likely be exercised by the holder and the call seller's initial gain is incrementally offset by the cash settlement to be paid out. A net loss to the seller will occur when the assets price exceeds the breakeven point of 112.9 where the cash settlements paid out at expiry will surpass the premium collected.

Now let's have a look at a trader who opts to buy a put option at the same strike and same premium as the call option for simplicity. This long put position means the trader owns the option, which gives them the right but not the obligation to sell the underlying asset at the strike price should they choose to do so. Let's have a look at the long puts payoff profile. Beginning with the outcome. If the assets price is the same as the strike of 105 at expiration, the puts option like the call is valueless. However, this does not equate to a neutral P&L. The premium of 7.90 has been paid out upfront, and thus the P&L reflects a loss equivalent to the premium of 7.90. However, if the assets price is above the strike at expiry, say 1.15 for example, the optionality becomes advantageous to the option holder. The option holder will decide to not exercise, forfeiting the option, thereby avoiding the sale of the asset at 105 under the terms of the option when they could sell it on the open market for 1.15. Nevertheless, this decision doesn't remove the fact that the premium has already been paid. Overall. This caps the potential loss at 7.90.

And what if the assets price dips below 105 at expiration? Consider, for example, the underlying assets price is at 100 at expiration. Here, the production becomes valuable granting the holder a five cash settlement since they have the right to sell the asset for 105 under the terms of the option, even though it's only worth 100 on the open market.

This scenario, however, doesn't provide the trade with a profit since the 7.90 premium still needs to be recouped. The net position here would be a loss of 2.90. Since the 5 gain that expiry covers some of the premium, but not all of it, the breakeven point is reached at an asset price of 97.10, where the cash settlement received from the difference between the strike price of 105 and the underlying asset price of 97.10 is equal to the premium of 7.90. If the underlying asset price is below this point, this will result in a profit for the trader. Since the settlement gain will be bigger than the premium and this gain will grow, the lower the underlying asset price is at expiration.

Turning finally to a short put position, which is where the trade has sold the option to the long side of the trade, giving them the right to sell the underlying asset to the short side should they choose to do so. Here the put seller will profit when the put buyer loses when the underlying trades above the strike at expiration, the put seller makes a P&L gain of 7.90 reflected by the premium, since the option won't be exercised by the holder. But if the assets price is below the strike, the put option holder will choose to exercise it diminishing the seller's profit by the cash settlement that they have to pay out, and that loss occurs if the asset price falls below the breakeven point of 97.10.