Tool
The option payoff calculator
Pick an option structure. See what it is worth on its last day at every stock price, and where it breaks even. Then change its strikes and premiums.
A call is a contract that lets you pay a set price per share for 100 shares, any time until a set date. A put is the reverse: a contract that lets you hand over 100 shares and be paid a set price per share for them, any time until a set date. The set price is the strike. The set date is the expiration, the contract's last day. The contract itself has a price, called the premium, quoted per share. One contract covers 100 shares, so a $2.46 premium is $246 a contract.
Step 1 · Pick a structure
A call you bought. You pay the premium. It makes money when the stock ends above the strike by more than the premium. The most it can lose is the premium.
Step 2 · Drag the price
The example: a long call
Stock at $110. Profit or loss +$254.
With the stock at $110 on the last day, this position is up $254 on 1 contract.
Profit or loss of the long call on its last day, for stock prices from $55 to $153. Green is a gain and red is a loss. The dashed line marks the strike.
What it does. You pay $2.46 a share, $246 in all. Below the $105 strike the call expires worthless, so the most you can lose is that $246. Above the strike the call's value rises $100 for every $1 the stock rises, so it breaks even at $107.46.
As of the numbers you setSource computed in this page. Illustrative, not a quote.
Step 3 · Change its numbers
Long call
These are invented example numbers. Type in any box. Every price is in dollars per share.
Three things to find · 0 of 3 found
Pick a structure and drag the price until each one happens.
- 1The stock falls and the position makes money.Hint: pick the long put and drag the price down.
- 2The position makes the most it can ever make.Hint: pick the covered call and drag the price up.
- 3The position loses the most it can lose.Hint: pick the long call and drag the price down.
The six shapes side by side
Same stock, six different lines.
Each one uses its own example numbers, on one contract and a $100 stock.
- Long callA call you bought.Most it can make: no limit. Most it can lose: $246. Breaks even at $107.46.
- Long putA put you bought.Most it can make: $9,290 if the stock went to zero. Most it can lose: $210. Breaks even at $92.90.
- Covered call100 shares you own, with a call sold against them.Most it can make: $680. Most it can lose: $9,820 if the stock went to zero. Breaks even at $98.20.
- Cash-secured putA put you sold, with the cash set aside to pay for the shares at the strike.Most it can make: $190. Most it can lose: $9,310 if the stock went to zero. Breaks even at $93.10.
- Vertical spread, with callsTwo options of the same kind and expiration: one you bought at one strike, one you sold at another.Most it can make: $750. Most it can lose: $250. Breaks even at $102.50.
- StraddleA call and a put you bought, both at the same strike.Most it can make: no limit. Most it can lose: $600. Breaks even at $94.00 and $106.00.
How it is computed
Method. Each option's value on its last day is its intrinsic value: a call is the stock price minus the strike, a put is the strike minus the stock price, never below zero. Subtract the premium for an option you bought, add it for one you sold. The line is the sum, times 100 shares a contract and the number of contracts. A covered call also holds the shares, bought at the stock price now.
Limits. The line is the last day only. Before then an option is worth more or less than this because of time left and implied volatility, and an option you sold can be assigned early. Commissions, taxes, dividends and margin are left out. The numbers are invented examples and are not a quote. This is a hypothetical illustration of option math.