This calculator helps you quickly estimate the potential profit or loss for a single options contract based on the underlying asset's price, the option's strike price, the premium paid, and the number of shares per contract. It's crucial for traders to understand these potential outcomes before entering any options trade.
How it Works: Calls vs. Puts
Options come in two main types: Calls and Puts.
Call Options: Give the buyer the right, but not the obligation, to buy the underlying asset at a specific price (the strike price) on or before a certain date. Buyers of call options generally expect the underlying asset's price to rise.
Put Options: Give the buyer the right, but not the obligation, to sell the underlying asset at a specific price (the strike price) on or before a certain date. Buyers of put options generally expect the underlying asset's price to fall.
The Math Behind the Calculator
The core of this calculation depends on whether you are analyzing a Call or a Put option. The calculator below provides a simplified view, focusing on the breakeven points and potential profit/loss at a given underlying price. For this calculator, we assume you are the buyer of the option.
For Call Option Buyers:
Breakeven Price: Strike Price + Option Premium Profit: (Underlying Asset Price – Strike Price – Option Premium) * Shares per Contract Loss: (Underlying Asset Price – Strike Price – Option Premium) * Shares per Contract (if negative)
The maximum loss for a call option buyer is the total premium paid.
For Put Option Buyers:
Breakeven Price: Strike Price – Option Premium Profit: (Strike Price – Underlying Asset Price – Option Premium) * Shares per Contract Loss: (Strike Price – Underlying Asset Price – Option Premium) * Shares per Contract (if negative)
The maximum loss for a put option buyer is the total premium paid.
Note: This calculator provides a snapshot and doesn't account for factors like trading commissions, dividends, or the time value decay (theta) which are critical in real-world options trading.
Use Cases
Speculation: Estimating potential gains from a directional bet on the underlying asset.
Risk Management: Understanding the maximum potential loss before entering a trade.
Strategy Planning: Calculating breakeven points for various options strategies.
Educational Tool: Helping new traders grasp the fundamental profit/loss dynamics of options.
function calculateBarchartOptions() {
var underlyingPrice = parseFloat(document.getElementById("underlyingPrice").value);
var strikePrice = parseFloat(document.getElementById("strikePrice").value);
var premium = parseFloat(document.getElementById("premium").value);
var sharesPerContract = parseInt(document.getElementById("sharesPerContract").value);
var resultValue = "–";
var resultText = "Please enter valid numbers for all fields.";
if (isNaN(underlyingPrice) || isNaN(strikePrice) || isNaN(premium) || isNaN(sharesPerContract) ||
underlyingPrice < 0 || strikePrice < 0 || premium < 0 || sharesPerContract <= 0) {
document.getElementById("result-value").innerText = resultValue;
document.getElementById("result").innerHTML = "Your Potential Outcome: " + resultValue + "" + resultText;
return;
}
// This calculator simplifies by showing potential profit/loss at the current underlying price.
// It doesn't differentiate between calls and puts explicitly in its output,
// but the user would input relevant strike prices for their specific call/put strategy.
// The calculation below reflects profit/loss for a BUYER.
// Simplified P/L calculation for a buyer:
// If the underlying price is above the strike for a call, it's profitable beyond the premium.
// If the underlying price is below the strike for a put, it's profitable beyond the premium.
// The calculation below gives a general idea of how far the price is from the breakeven.
// Calculate breakeven for a CALL buyer
var breakevenCall = strikePrice + premium;
// Calculate breakeven for a PUT buyer
var breakevenPut = strikePrice – premium;
var potentialProfitLoss = 0;
var outcomeDescription = "";
// This is a generalized output. Users must interpret based on whether they bought a call or put.
// For a CALL BUYER: Profit occurs if underlyingPrice > breakevenCall
// For a PUT BUYER: Profit occurs if underlyingPrice strikePrice) {
potentialIntrinsicValue = (underlyingPrice – strikePrice) * sharesPerContract;
}
// Assuming the user is evaluating a Put Option:
// else if (underlyingPrice < strikePrice) {
// potentialIntrinsicValue = (strikePrice – underlyingPrice) * sharesPerContract;
// }
// Note: This simplified calculator focuses on the CALL scenario's potential profit calculation as a general example.
// For a PUT, the calculation would be: (strikePrice – underlyingPrice) * sharesPerContract IF underlyingPrice = 0) {
outcomeDescription = "Potential Profit: $";
resultText = "You are potentially in profit at this underlying price.";
} else {
outcomeDescription = "Potential Loss: $";
resultText = "You are potentially at a loss at this underlying price.";
}
document.getElementById("result-value").innerText = Math.abs(potentialProfitLoss).toFixed(2);
document.getElementById("result").innerHTML = "Your Potential Outcome: " + outcomeDescription + Math.abs(potentialProfitLoss).toFixed(2) + "" + resultText;
}