The Payoff

In finance, "payoff" refers to the amount you earn or lose from an investment or financial contract at its conclusion. It shows how much money you will receive or owe based on the outcome of the underlying asset or event, such as stock prices or interest rates. For example, if you buy a call option, your payoff depends on whether the stock price rises above a certain level; if it does, the payoff is the profit made. Essentially, the payoff summarizes the final financial result of a position, helping investors understand potential gains or losses.