Options profit calculator

What this options calculator shows, and what it does not

An option gives its buyer the right, not the obligation, to buy (a call) or sell (a put) 100 shares of the underlying at a fixed price, the strike, until a set date. The buyer pays a premium for that right. The seller (or writer) receives the premium and takes on the obligation.

This calculator values one such position, called a single leg, on the day it expires. On that day the maths is clean: the option is worth exactly what it would pay if exercised, and nothing more. That makes it the right tool for questions like "where do I break even?", "what do I make if the stock closes at $110?" and "what is the most I can lose?".

Three terms describe where the underlying stands against the strike. A call is in the money when the price is above the strike, and a put when it is below. An option is at the money when the price and strike are roughly equal, and out of the money otherwise. Only an in-the-money option has value at expiry, and only that value, the distance into the money, counts towards your result. An option that is in the money by less than the premium paid still loses money overall, which is why the break-even matters more than the strike. Most brokers exercise in-the-money equity options automatically at expiry, so if you do not want to buy or sell the shares, close the position beforehand.

What it deliberately leaves out: time value, implied volatility and the Greeks (delta, gamma, theta, vega), which drive an option's price before expiry; early exercise and assignment, which can happen at any time on American-style options; dividends; and commission. If you plan to close before expiry, the at-expiry figure is a boundary, not a forecast. Multi-leg strategies such as spreads and straddles are combinations of single legs: you can work out each leg here and add the results at the same expiry price.

The payoff formulas for calls and puts

Write S for the underlying price at expiry, K for the strike and P for the premium per share. Profit per share at expiry is:

Long call: max(S − K, 0) − P
Long put: max(K − S, 0) − P
Short call: P − max(S − K, 0)
Short put: P − max(K − S, 0)

Multiply by the shares per contract (100 for standard US equity options) and the number of contracts to get the total.

Notice the symmetry: every long position has a matching short position with the opposite result. Options are a zero-sum contract between buyer and seller before costs.

A worked example

A hypothetical trade: a stock trades around $100. You buy one call with a $100 strike for a premium of $4.00 per share. One contract covers 100 shares, so the trade costs $400.

1. Stock at $110 on expiry: the call is worth $110 − $100 = $10 per share. Less the $4 premium, that is $6 per share, or +$600 on the contract.
2. Break-even: $100 + $4 = $104. Below that, the call loses money at expiry even though it may be in the money.
3. Stock at or below $100: the call expires worthless and you lose the full $400, which is also the maximum loss.
4. Maximum profit: unlimited, because there is no ceiling on how high the stock can go.

Now take the other side, again with hypothetical numbers: you sell three puts with a $50 strike for $2.35 each. You receive $705. If the stock is at $44 on expiry, each put is worth $6, so you lose $6 − $2.35 = $3.65 per share, or −$1,095 in total. Break-even is $47.65, the most you can make is the $705 premium, and the most you can lose is $14,295, if the stock goes to zero.

Enter either set of numbers above and the calculator returns the same figures, with the payoff table showing how the result changes around the strike.

Reading the payoff table, and common mistakes

The table lists nine expiry prices centred on the strike. For a long call you will see a flat loss equal to the premium on every row at or below the strike, then a line rising one-for-one with the stock. For a short put you see the reverse: a flat profit equal to the premium above the strike and a growing loss below it. That bent line is the "hockey stick" shape of every single-leg option.

Mistaking the strike for break-even. An option bought for $4 has to finish $4 in the money just to return the premium. Many losing option trades were "right" about direction and wrong about how far.

Forgetting the multiplier. A quoted price of $4.00 means $400 per contract. Index options, mini options and contracts after a stock split or merger can use a different multiplier, which is why it is a field here.

Treating short options as small, safe income. Selling options collects a small, capped premium in exchange for a large or unlimited potential loss. It also ties up margin, and an American-style short option can be assigned before expiry, typically when it is deep in the money or just before a dividend.

Using expiry maths for a trade you will close early. Before expiry the option still has time value, which shrinks each day (theta) and moves with volatility. An option can lose money even when the stock moves your way, if it moves too slowly.

Whatever the instrument, size the position from the amount you can afford to lose. For a long option that number is the premium, which makes it easy to apply the same per-trade limit described in the risk management guide.

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