What is a Non-Linear Stock Payoff? The payoff of a derivative contract that may move proportionally more or less than the price of its underlying. Derivatives based on options have nonlinear payoffs. Such contracts are quite difficult to discern, valuate, and manage. For example, the payoff of a call option may change by varying degrees when the underlying asset increases by one dollar. Related articles What is a Multiplier? What is Notional Value? What are Out of The Money Options? What is Structural Dealer Positioning? What is a Linear Stock Payoff?