Option Strategies

Alternatively you can look at the examples on the black scholes model page. The spreadsheet is really more of a learning tool. Enter the following values: You would need accurate access to all the trade information in order to calculate it yourself so I would say that traders would obtain it from their broker or other vendor. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. For your payoff you id the leg as stock and do not use the option multiplier.

Options Profit Calculator. Options Profit Calculator provides a unique way to view the returns and profit/loss of stock options strategies. To start, select an options trading strategy Basic. Covered Call; Naked call (bearish) Long call (bullish).

Related Posts You May Like

It helps you determine the likelihood of a strategy reaching certain price levels by a set date, using a normal distribution curve. You can also view the numerical probability of reaching a specific target, above and below the current price, by expiration.

To do this, move the vertical slider bars with your mouse or enter prices for the lower and upper targets shown in the yellow boxes below. All option pricing inputs can be changed. This allows you to view the price levels and probabilities that are most important to you. For example, you can edit the default implied volatility, dividend yield and interest rate settings to see how this might affect the outcomes, both numerically and graphically.

The maximum gain for long calls is theoretically unlimited regardless of the option premium paid, but the maximum loss and breakeven will change relative to the price you pay for the option. These values are automatically calculated for many other option strategies, too, although the formulas are different. These probability calculations will change if you alter the lower and upper targets by either moving the slider bars with your mouse, or by typing in specific values for the lower target and upper target.

The profit and loss calculations shown in the blue box above for the date of entry orange line , the half-way point blue line , and expiration purple line are estimated assuming the price of the underlying stock remains unchanged from its current level. In this example, the calls are out of the money initially so notice how the loss increases as time elapses toward expiration; this is due to time value erosion. If you would like to forecast the probabilities of the underlying stock reaching a different price on the various dates displayed, place your cursor anywhere on the chart and hold down the left mouse button.

As shown in the pink circle below, this will display the probability of the option reaching that price at any time between now and expiration "Prob. Touching" as well as the probability of the option reaching a certain price level at expiration "Prob.

In addition, you can easily make the following calculations, which many option traders find useful:. As shown below, if you would like to zoom in on the distribution curve, you can choose a closer date for the "Probability" calculation shown in the red box below. This is helpful because it separates the visual profit and loss lines for the various dates.

This will also cause the probability calculations shown in the pink box below to be oriented to the new date you selected, rather than the expiration date of the option default setting. As shown below, you can even turn off any of the various visual displays the normal distribution curve in this example by simply clicking on the colored box next to the date.

In my next article, I'll go into more depth and cover additional functionality in analyzing specific option strategies. All stock and option symbols and market data shown above are for illustrative purposes only and are not a recommendation, offer to sell, or a solicitation of an offer to buy any security.

Learn more about Schwab Trading Services. Options carry a high level of risk and are not suitable for all investors. Certain requirements must be met to trade options through Schwab. Please read the options disclosure document titled Characteristics and Risks of Standardized Options before considering any option transaction. Thank you in advance. Hi Amit, is there an error that you can provide?

What OS are you using? Have you seen the Support Page? Indian man trading today Found spreadsheet but does work? Look at it and needs fix to fix problem? Dear Sir , thanks for the reply.. Hello Sir, I am looking for some options hedge strategies with excels for working in Indian markets Ok, I see now. Let me know if this doesn't work. Thanks for your time. I was wondering if this spreadsheet can be opened with open office? If so how would i go about this? Hi NK, Whatever money costs you i.

If you want to calculate the historical volatility for a stock then you can use my historical volatility spreadsheet. You will also need to consider dividend payments if this is a stock that pays dividends and enter the effective yearly yield in the "dividend yield" field. The prices don't have to match. If the prices are out, this just means that the market is "implying" a different volatility for the options than what you have estimated in your historical volatility calculation.

This could be in anticipation of a company announcement, economic factors etc. Hi, i'm new to options. Date - 30 Sept, Strike price - Interest rate - 9. Also plz tell me what to put for Interest rate and from where to get the volatility for particular stocks in calculation.

Why is there such a difference and what should be my trading strategy in these? If you're a market maker, however, you would want something more accurate. If you're interested in pricing American options you can read the page on the binomial model , which you'll also find some spreadsheets there.

Hi Peter, Sorry for the confusion, but i am looking for some volatility formula only for futures trading and not options. Can we use historical volatility in futures trading?

Hi Gina, 15 points is the profit of the spread, yes, but you have to subtract the price that you have paid for the spread, which I assume is 5 - making your total profit 10 instead of Hi Mahajan, Do you mean options on futures or just straight futures?

The spreadsheet can be used for options on futures but is not useful at all if you are just trading outright futures. If you look at Dec PUTs for netflix - I have a put spread - short and long - why doesn't this reflect a profit of 15 instead of 10? Hi Peter, First of all tons of thanks for providing the useful excel. I am very new to options previously i was trading in commodities futures. Can you please help me in understanding, how i can use these calculations for future trading silver,gold,etc?

If there is any link please provide me the same. Thanks again for enlightening thousand of traders. Hi Edwin, There isn't currently a sheet specifically for calendar spreads, however, you're welcome to use the formulas provided to build your own with the parameters needed.

You can email me if you like and I can try and help you with an example. I am an active options trader with my own trade boob, I find your worksheet "Options Strategies quite helpful, BUT, can it cater for calendar spreads, I caanot find a clue to insert my positions when faced with options and fut contracts of different months? Look forward to hearing from you soon. Hi Peter, many thanks. I had gone through the VB functions but they use many inbuild excel functions for calculations.

I wanted to write the program in Foxpro old time language which does not have the inbuild functions in it and hence was looking for basic logic in it. Never the less, the excel is also very useful, which i don't think anyone else has also shared on any site. I went through the complete material on Options and you have really done a very good knowledge sharing on Options.

You have really discussed in depth near about 30 strategies Hi Sunil, for Delta and Implied Volatility the formulas are included in the Visual Basic provided with the spreadsheet at the top of this page.

For Historical Volatility you can refer to the page on this site on calculating volatility. However, I am not sure on the profit probability - do you mean the probability that the option will expire in the money? Hi Peter, How do i calculate the following. I want to write a program to run it on various stocks at a time and do first level scanning. Hi DevRaj, You can try my volatility spreadsheet that will calculate the historical volatility that you can use in the option model.

Very useful nice article and the excel is very good Still one question How to calculate volatility using option price, spot price, time? Hi Peter, I have just started using the spreadsheet provided by you for option trade.

A wonderful easy to use stuff with adequate tips for easy usage. Thanks for your best efforts to help educate the society. Hi Karen, those are some great points! I am looking closely at a few option picking services right now and plan to list them on the site if they prove to be successful. Is your option trading not working because you haven't found that right system yet or because you won't stick to one system?

What can you do to find the right system and then stick to it? Could a lot of what is not working for you be because of how you are thinking? Your beliefs and mindset? Working on improving yourself will help all areas of your life. Sure, you can use implied volatility if you like.

But the point of using a pricing model is for you have your own idea of volatility so you know when the market is "implying" a value different to your own. Then, you are in a better position to determine if the option is cheap or expensive based on historical levels.

The spreadsheet is really more of a learning tool. To use implied volatilities for the greeks in the spreadsheet would require the workbook to be able to query option prices online and download them to generate the implied volatilities. That's why I have unlocked the VBA code in the spreadsheet so that users can customize it to their exact needs.

Should not the Greeks be determined by Implied Volatility? Comparing the values of the Greeks calculated by this workbook produces values that agree with, e.

It is the expected volatility that the underlying will realize from now until the expiration date. Hi Madhuri, do you have Macros enabled? Please see the support page for details.

Even when you first open the thing, the default values the creator put in don't even work" -madhuri. Finally a good site with a simple and easy to use spreadsheet! Guys, this works and it is pretty easy. Just enable macros in excel. The way it has been put is very simple and with little understnading of Options any one can use it. The thing opened immediately for me, works like a charm.!! I am so pleased that you referenced it Hi Peter, I need your help about the Asian option pricing using excel vba.

I don't know how to write the code. You sir, are an artist. One old hacker 76 years old - started on the PDP 8 to another. Hi Ken, Take a look at the following page: Hi, What if i am using the Office on Mac?

Ok, it's working now. FYI, I had enabled all the macros in "Security of the macros". Can't wait to play with the file now I don't see the popup. I use Excel under Vista. The presentation is quite different from the previous versions. I enabled all macros. But I still get the name error. Hi Dissapointed, The spreadsheet requires Macros to be enabled for it to work. Do you see a popup on the toolbar asking you if you want to enable this content? Just click it and select "enable".

Please send me an email if you need further clarification. Even when you first open the thing, the default values the creator put in don't even work. Option Pricing Spreadsheet My option pricing spreadsheet will allow you to price European call and put options using the Black and Scholes model. Option Trading Workbook Understanding the behavior of option prices in relation to other variables such as underlying price, volatility, time to expiration etc is best done by simulation.

Simplified On the "basic" worksheet tab you will find a simple option calculator that generates fair values and option Greeks for a single call and put according to the underlying inputs you select. Implied Volatility Underneath the main pricing outputs is a section for calculating the implied volatility for the same call and put option.

Payoff Graphs The PayoffGraphs tab gives you the profit and loss profile of basic option legs; buy call, sell call, buy put and sell put. Formulas Theoretical and Greek Prices Use this Excel formula for generating theoretical prices for either call or put as well as the option Greeks: Comments Peter February 19th, at 4: Luciano February 19th, at Peter January 12th, at 5: Mike C January 12th, at 6: Mike Peter December 14th, at 4: Clark December 14th, at 4: Peter October 7th, at 6: Denis October 7th, at 3: Peter June 10th, at 1: Jack Ford June 9th, at 5: Peter January 10th, at 1: Ravi June 3rd, at 6: Peter May 28th, at 7: Thank you Max Peter April 30th, at 9: Peter April 15th, at 7: Ryan April 12th, at 9: Peter April 12th, at Ryan April 10th, at 6: Thanks, Ryan Peter March 21st, at 6: Desmond March 21st, at 3: Steve December 16th, at 1: Regards, Vladmir Peter June 4th, at Sincerely, Zoran Peter May 21st, at 5: B May 21st, at 5: Darong April 3rd, at 3: Regards, pintoo yadav March 29th, at Amitabh March 15th, at Warm wishes Amitabh Choudhury [email removed] madhavan March 13th, at 7: Jean charles February 10th, at 9: Peter January 31st, at 2: Peter January 26th, at 5: The workbook is not opening P December 2nd, at Deepak November 17th, at Regards Peter November 16th, at 5: Deepak November 16th, at 9: Regards Peter October 30th, at 6: NEEL October 30th, at Peter October 5th, at Peter October 5th, at 5: Kyle October 5th, at 3: Peter October 4th, at 5: Are you having troubles with Open Office?

Kyle October 4th, at 1: Peter October 3rd, at

Current calculations

Cboe's options calculator and margin calculator were designed to support options investors. Visit our site to get access to our option trading calculators. This stock option calculator computes the theoretical price of a one Try the Stock Option Strategy Calculator. LONG CALL: NET DEBIT: stock symbol list call bear spread covered calls stocks write covered calls black scholes model best stocks to trade stock trading tutorial strike price double diagonal spread low risk stock. Long call (bullish) Calculator Purchasing a call is one of the most basic options trading strategies and is suitable when sentiment is strongly bullish. It can be used as a leveraging tool as an alternative to margin trading.