A free option calculator to know our profitability
When an option trader intends to operate in the options market, it is essential to have powerful tools to calculate option premiums and to predict in advance what our potential losses and profits are.
On this page, you will find a link to the option calculator with which I base practically all my option operations, and on which I explain all the examples I use in this blog and in my books. This calculator replicates the Black-Scholes option model when we enter the six essential parameters. The calculator will return the option premium value along with its greeks, for both call and put options.
What do you need to use the option calculator?
To use it, all you will need is a program that allows you to open spreadsheets, such as Microsoft Excel.
To correctly use it, all you have to do is access the options chain that you are interested in. First, look at the underlying price and then select the strike price you intend to take. Then, choose the implied volatility of your option contract. Remember that volatility will vary depending on the side you take. Then, take the interest ratio of the general market and the dividend value the particular company you are trading distributes.
Finally, enter the number of days remaining for the contracts you are dealing with to expire and write that value on the option calculator. Once you have entered all the data, you will get on the right side the premium price for call and put contracts, as well as a breakdown of the greeks.
With all the information the option calculator gives you, you will be able to calculate much more precisely the profitability and risk the operation is subjected to, and therefore, make better decisions in the long run.
Download your free calculator below!
Your Free Option Calculator
Do you need a better calculator?
If you need to elaborate option strategies with multiple legs, an advanced calculator that allows you to input multiple option contracts is a better choice.
In this option trading calculator, you will be able to watch the profit/loss curve of the strategy, both at expiration and at the current date, as well as learn where the maximum gain and loss is located. Also, the advanced calculator will provide you with the break-even point of the strategy, so you have a better understanding of the entire scenario.
If you need more information about how to use the advanced calculator, take a look at this article here: The Most Complete Advanced Option Trading Calculator for Excel