Stock Option Calculator

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What is an option in finance?

An option in finance means that it is a contract with the help of which a buyer or the holder or the owner of a said option has the right but does not hold any sort of responsibility to either sell or buy the underlying asset or for that matter an instrument that too at a specified strike price on a particular date. However, this is based on the kind of option it is.

Stock Option Calculator

Current stock Price: Rs
strike Price: Rs
Option Price: Rs
Call intrinsic Value: Rs
Put intrinsic value: Rs
Time value for call: Rs
Time value for put: Rs

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In addition to this, strike price may be set by nothing but reference to the market price or the spot price of the commodity or the underlying security. This is however done on the day when either the option is taken out or when it may be fixed at a premium / discount. On the other hand, seller can take up the responsibility to fulfil the transaction which means that they may sell or even buy only when the owner or the buyer exercises the option.

What is call & put in stock option calculator?

Call can be defined as an option which conveys to an owner the right to buy at a particular price. Whereas the option which conveys the right of an owner to sell at a particular price is generally known as put. While both are usually traded however, call option is the option which is frequently discussed.

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What is option pricing?

Trading options are inclusive of the following aspects – (1) current stock price (2) time to expiration or time value (3) intrinsic value (4) cash dividends paid (5) interest rates. To know the fair market value of the option, a number of options pricing models are put in to use however, the most commonly used options pricing model is the Black – Scholes model. Furthermore, these options can be termed to be another kind of investment. However, to take advantage of the moves of the market, price plays a key role here.

Formula used in the stock option calculator

The formula that is used in a stock option calculator has been given below. Have a look at it –

\(call \,option\, intrinsic\, value\,=\,underlying\, stock (s) \,current\, price-call\, strike \,price \)

\(put\, option\, intrinsic\, value\,=\,put\, strike\, price- underlying\, stock (s)\, current\, price\)

\(time\, value\,=\,option\, price-intrinsic\, value\)

How to use a stock option calculator?

To make use of an online stock option calculator, the following steps are to be followed. Moreover, with this free stock option calculator, one will be able to calculate option price besides the implied volatility.

Steps to use online stock option calculator

The 1st step when using a stock option calculator is that you will have to select either call or put option from the drop down list. The next field has the trade date followed by the option expiry date. In addition to this, a user will also be required to enter the spot price of underlying, strike price, underlying volatility, market price of option & the risk free rate before clicking on the calculate tab in order to calculate stock option.