A derivative payoff diagram, often called a "profit and loss (P&L) diagram" or "payoff profile," is a graphical representation that shows the potential profit or loss of a derivative contract at different underlying asset prices, expiration dates, or other relevant variables. These diagrams are commonly used in options and futures trading to visually understand the potential outcomes of a position. 1. Call Option Payoff Diagram: 2. Put Option Payoff Diagram: These are simplified payoff diagrams for individual options. More complex diagrams can be created for combinations of options and positions, such as spreads, straddles, and strangles, to visualize potential outcomes under various scenarios.