Calculate the potential profit or loss of a put option contract.
Your Put Option Result:
Enter details above to calculate.
Understanding Put Options and the Calculator
A put option is a financial contract that gives the owner (the buyer) the right, but not the obligation, to sell an underlying asset (like a stock) at a specified price (the strike price) on or before a certain date. The seller of the put option is obligated to buy the asset if the buyer decides to exercise their right.
Put options are typically bought by investors who believe the price of the underlying asset will fall. They can be used for speculation (profiting from a price decline) or for hedging (protecting an existing stock position against a downturn).
How the Put Option Calculator Works
Our Put Option Calculator helps you quickly determine the potential profit or loss of a single put option contract based on key parameters. The calculation is straightforward:
When you buy a put option, your maximum potential loss is limited to the premium you paid for the option. This is the cost of acquiring the right to sell the stock at the strike price.
Your potential profit depends on how far the stock price falls below the strike price. The formula to calculate the profit or loss per share at expiration is:
Profit/Loss per Share = (Strike Price – Current Stock Price) – Premium Paid
However, this is only if the Current Stock Price is *below* the Strike Price. If the Current Stock Price is *above* the Strike Price, the option expires worthless, and your loss is simply the Premium Paid.
The calculator also considers the Shares per Contract to give you the total profit or loss for the entire contract.
Total Profit/Loss = Profit/Loss per Share * Shares per Contract
Key Terms:
Current Stock Price: The current market price of the underlying stock.
Strike Price: The price at which the option holder has the right to sell the stock.
Premium Paid (per share): The cost paid by the buyer to acquire the put option contract. This is a cost, so it's always a negative factor in profit.
Shares per Contract: The number of shares of the underlying stock that one option contract represents (commonly 100).
Example Scenario:
Let's say you believe XYZ Corp stock (currently trading at $50.00 per share) is going to fall. You decide to buy a put option with a strike price of $48.00. The premium for this option is $1.50 per share, and each contract covers 100 shares.
If the stock price stays above $48.00 (e.g., $49.00) by expiration:
The option expires worthless.
Your loss is the premium paid: -$1.50 per share * 100 shares = -$150.00
This calculator provides a simplified view. Real-world option trading involves factors like time decay (theta), volatility (vega), and commissions, which are not included here.
function calculatePutOption() {
var stockPrice = parseFloat(document.getElementById("stockPrice").value);
var strikePrice = parseFloat(document.getElementById("strikePrice").value);
var premiumPaid = parseFloat(document.getElementById("premiumPaid").value);
var sharesPerContract = parseInt(document.getElementById("sharesPerContract").value);
var resultValueElement = document.getElementById("resultValue");
resultValueElement.style.color = '#28a745'; // Default to success green
if (isNaN(stockPrice) || isNaN(strikePrice) || isNaN(premiumPaid) || isNaN(sharesPerContract) ||
stockPrice < 0 || strikePrice < 0 || premiumPaid < 0 || sharesPerContract <= 0) {
resultValueElement.textContent = "Please enter valid positive numbers for all fields.";
resultValueElement.style.color = '#dc3545'; // Red for error
return;
}
var profitLossPerShare;
var totalProfitLoss;
if (stockPrice = 0) {
formattedResult = "$" + totalProfitLoss.toFixed(2);
resultValueElement.style.color = '#28a745'; // Green for profit
} else {
formattedResult = "$" + totalProfitLoss.toFixed(2);
resultValueElement.style.color = '#dc3545'; // Red for loss
}
resultValueElement.textContent = formattedResult;
}