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 seven 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.

Whether 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 1 0 5 at expiration, the put option like the call is valueless.

However, this does not equate to a neutral p and l.

The premium of seven 90 has been paid out upfront and thus the p and l reflects a loss equivalent to the premium of seven 90.

However, if the assets price is above the strike at expiry, say one 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 1 0 5 under the terms of the option when they could sell it on the open market for one 15.

Nevertheless, this decision doesn't remove the fact that the premium has already been paid.

Overall. This caps the potential loss at seven 90 and what if the assets price dips below 1 0 5 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 1 0 5 under the terms of the option, even though it's only worth 100 on the open market.

This scenario, however, doesn't provide the trader with a profit since the seven 90 premium still needs to be recouped.