The glowing ribbon is a payoff diagram: for every possible underlying price on the horizontal axis, its height is the profit or loss of one contract at expiry. Green means the position is in profit, red means it's underwater. The bright sphere is a live simulated market price following a random walk (a simplified geometric-Brownian-motion model of how real underlying assets move); as it drifts left and right along the ribbon, it rises and falls with the payoff at that exact price, and the "Live P&L" readout tracks that height in real time.
Long call: payoff = max(S − K, 0) − premium
Short call: payoff = premium − max(S − K, 0)
Long put: payoff = max(K − S, 0) − premium
Short put: payoff = premium − max(K − S, 0)
Long future: payoff = S − K
Short future:payoff = K − S
dS = S·(μ·dt + σ·√dt·N(0,1))
- Strike (K) — the price locked in by the contract; the kink in every option payoff sits exactly here.
- Premium — the upfront price paid for an option (irrelevant for a future, which has no upfront cost, only daily settlement).
- Contracts — scales the payoff linearly, the way holding more lots multiplies both gains and losses.
- Volatility & drift — control how wildly and in which direction the simulated spot price wanders; higher volatility means the marker swings across the kink more often, which is exactly the risk an option premium is priced to compensate for.
Real-world relevance: a long call/put has a capped loss (the premium) but theoretically unlimited or large upside, which is why buyers use options to speculate cheaply or insure a position; a short option flips that — capped income, exposed downside — which is why sellers demand the premium as compensation. A future has no premium at all but symmetric, uncapped risk on both sides, which is why futures are marked to market and margined daily instead.