This options trading calculator is designed to help traders visualize the potential outcome of long call and long put strategies. In options trading, understanding your break-even point and the impact of the "multiplier effect" (where 1 contract typically represents 100 shares) is crucial for risk management.
Key Variables Defined:
Strike Price: The fixed price at which the owner of the option can buy (Call) or sell (Put) the underlying stock.
Premium: The price you pay per share to purchase the option contract. If the premium is $2.00, one contract costs $200.
Break-even Point: For a Call, it is Strike + Premium. For a Put, it is Strike – Premium. This is the price the stock must reach for your profit to be zero.
Example Scenario: A Long Call
Imagine you buy 1 Call Option for Stock ABC with a Strike Price of $150. You pay a Premium of $3.00 per share. Your total investment is $300 ($3.00 x 100 shares).
If at expiration the stock is trading at $160, your option is "In the Money." You have the right to buy at $150 and could sell immediately at $160, making $10 profit per share. Subtracting your $3.00 premium, your net profit is $7.00 per share, or $700 total.
The Risk of Options
The maximum loss for a buyer of an option is limited to the total premium paid. This makes long options a "defined risk" strategy. However, if the stock price does not move past the strike price in the desired direction before expiration, the option can expire worthless, resulting in a 100% loss of the invested capital.
function calculateOptionsProfit() {
var type = document.getElementById("optionType").value;
var strike = parseFloat(document.getElementById("strikePrice").value);
var premium = parseFloat(document.getElementById("premiumPrice").value);
var contracts = parseInt(document.getElementById("contracts").value);
var target = parseFloat(document.getElementById("targetPrice").value);
if (isNaN(strike) || isNaN(premium) || isNaN(contracts) || isNaN(target)) {
alert("Please enter valid numbers in all fields.");
return;
}
var totalCost = premium * 100 * contracts;
var breakEven = 0;
var grossPL = 0;
if (type === "call") {
breakEven = strike + premium;
var intrinsicValue = Math.max(0, target – strike);
grossPL = intrinsicValue * 100 * contracts;
} else {
breakEven = strike – premium;
var intrinsicValue = Math.max(0, strike – target);
grossPL = intrinsicValue * 100 * contracts;
}
var netPL = grossPL – totalCost;
var roi = (netPL / totalCost) * 100;
// Update UI
document.getElementById("resTotalCost").innerText = "$" + totalCost.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("resBreakEven").innerText = "$" + breakEven.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
var plElement = document.getElementById("resNetPL");
plElement.innerText = (netPL >= 0 ? "+" : "") + "$" + netPL.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
plElement.style.color = netPL >= 0 ? "#2e7d32" : "#d32f2f";
var roiElement = document.getElementById("resROI");
roiElement.innerText = roi.toFixed(2) + "%";
roiElement.style.color = roi >= 0 ? "#2e7d32" : "#d32f2f";
document.getElementById("optionResult").style.display = "block";
}