Call option profit formula

Put Option ProfitLoss Breakeven Point Stock Price at Expiration For every dollar the stock. The premium paid is p 0.

Call Option Payoff Diagram Formula And Logic Macroption

To calculate profits or losses on a put option use the following simple formula.

. The price of the underlying asset increases to 130 per share. IFcondition result if condition is true result if condition is false In our case. The profit for a call option is calculated by subtracting the strike price from the underlying.

The profit of an option is calculated by subtracting the options current price from its strike price. As a final step subtract the total price of the premium paid for the contracts from the prior calculation. Purchase of three 95 call option contracts.

Profit 8 x 100 x 3 contracts 2400 minus premium paid of 900 1500 1667 return 1500 900. Breakeven BE strike price option premium 145 350 14850 assuming held to expiration The maximum gain for long calls is theoretically unlimited regardless of the. 1 Put Option Payoff for Buyer.

The buyer decides to exercise the call option and purchase the sellers shares. The put buyer will earn a profit when the exercise. In this case the seller would earn.

So if an investor had paid 260 in premiums for these options contracts. Then the profit for put option buyer and seller can be calculated as below. We can do this easily using Excel IF function which takes three parameters and looks like this.

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