A gap option is a type of European option with two strike prices, X and X', where X' is sometimes referred

to as the trigger price. The payoff for a gap option is non-zero only if the difference between the two
strike prices is greater than zero. In this case, there will be a gap in the payoff graph that is either
increased or decreased by the difference between the strike prices.

Let's take the example of a gap call option. Suppose the strike price X is $50 and the trigger price X' is
$60. The gap is therefore $10 ($60 - $50). If the stock price at maturity S is greater than the trigger price
X', then the payoff for the call option will be equal to S - X. For example, if the stock price at maturity is
$70, then the payoff for the call option will be $70 - $50 = $20.

However, if the stock price at maturity is less than or equal to the trigger price X', then the payoff will be
zero. For example, if the stock price at maturity is $55, then the payoff for the call option will be zero.

If the stock price at maturity is greater than X' but less than X, then the payoff will be reduced by the
difference between the two strike prices, X' - X. For example, suppose the stock price at maturity is $55
and X is $50. The payoff for the call option would be $55 - $50 = $5, but because the difference between
the two strike prices is $10, the actual payoff would be $5 - $10 = -$5, which is a negative payoff.

In summary, the payoff for a gap call option is:

 S - X, if S > X'
 0, if S <= X'
 S - X - (X' - X), if X' < S <= X

Note that the payoff for a gap put option would be the opposite of the gap call option.

Suppose the strike price X is $80 and the trigger price X' is $90. The gap is therefore $10 ($90 - $80).

If the stock price at maturity S is greater than the trigger price X', then the payoff for the call option will
be equal to S - X. For example, if the stock price at maturity is $100, then the payoff for the call option will
be $100 - $80 = $20.

If the stock price at maturity is less than or equal to the trigger price X', then the payoff will be zero. For
example, if the stock price at maturity is $85, then the payoff for the call option will be zero.

If the stock price at maturity is greater than X' but less than X, then the payoff will be reduced by the
difference between the two strike prices, X' - X. For example, suppose the stock price at maturity is $88
and X is $80. The payoff for the call option would be $88 - $80 = $8, but because the difference between
the two strike prices is $10, the actual payoff would be $8 - $10 = -$2, which is a negative payoff.

In summary, the payoff for a gap call option with strike price X of $80 and trigger price X' of $90 is:

 S - X, if S > X'
 0, if S <= X'
 S - X - (X' - X), if X' < S <= X
 So, if the stock price at maturity is $100, the payoff will be $20. If the stock price at maturity is $85, the
payoff will be zero. And if the stock price at maturity is $88, the payoff will be -$2.

Suppose the strike price X is $70 and the trigger price X' is $60. The gap is therefore $10 ($70 - $60).

If the stock price at maturity S is less than the trigger price X', then the payoff for the put option will be
equal to X - S. For example, if the stock price at maturity is $50, then the payoff for the put option will be
$70 - $50 = $20.

If the stock price at maturity is greater than or equal to the trigger price X', then the payoff will be zero.
For example, if the stock price at maturity is $65, then the payoff for the put option will be zero.

If the stock price at maturity is less than X' but greater than or equal to X, then the payoff will be reduced
by the difference between the two strike prices, X' - X. For example, suppose the stock price at maturity is
$63 and X is $70. The payoff for the put option would be $70 - $63 = $7, but because the difference
between the two strike prices is $10, the actual payoff would be $7 - $10 = -$3, which is a negative payoff.

In summary, the payoff for a gap put option with strike price X of $70 and trigger price X' of $60 is:

 X - S, if S < X'
 0, if S >= X'
 X - S - (X' - X), if X <= S < X'

So, if the stock price at maturity is $50, the payoff will be $20. If the stock price at maturity is $65, the
payoff will be zero. And if the stock price at maturity is $63, the payoff will be -$3.