In this video, we dive into the concept of options trading using a practical example involving Jake and Sarah who are speculating on Nippon Airlines stock. We explore two positions: buying a call option with a $140 strike price and a $3 premium, and selling a call option with a $160 strike price and a $2 premium. We use a payoff table to determine the profit and losses at various stock prices, including $160 and $208. By walking through these positions step-by-step, we break down how to calculate payoffs and profits, as well as create a payoff diagram to visually represent the results. By the end, you'll have a solid understanding of how to approach options trading problems in finance!