Options Price Calculator

Step-by-Step Guide to Using the Options Price Calculator

Introduction

This guide will walk you through the process of using the Options Price Calculator to accurately determine the price and greek values of a financial option. Follow these steps to input your parameters and understand the resulting calculations.

Step 1: Input the Spot Price

Locate the input field labeled Spot Price. Here, you should enter the current price of the underlying stock. This value must be a positive number, no less than 0.01. Ensure that it accurately reflects the real-time market value of the stock.

Step 2: Input the Strike Price

In the field labeled Strike Price, enter the price at which the option can be exercised. Like the spot price, this must also be a positive number, no less than 0.01. Double-check to ensure that it’s consistent with the terms of your option contract.

Step 3: Set the Time to Expiration

Enter the time remaining until the option’s expiration in the Time to Expiration (Years) field. This should be a number between 0.01 and 10 years. Use increments of 0.01 for more precision if necessary.

Step 4: Provide the Risk-Free Rate

Input the annual risk-free rate, expressed as a percentage, in the Risk-Free Rate (%) field. Acceptable values range from 0 to 100, with increments of 0.01 to capture the nuances of the financial environment.

Step 5: Specify the Volatility

In the Volatility (%) field, present the annual volatility of the stock’s returns. This should also be entered as a percentage, ranging from 0 to 200, using 0.01 increments to ensure accurate risk assessment.

Step 6: Select the Option Type

Select either Call Option or Put Option from the Option Type drop-down menu. The selection will tell the calculator which type of option pricing logic to apply.

Step 7: Review Your Calculated Results

Once all fields are filled, the calculator will display results for both the call and put option prices, as well as the greeks (Delta, Gamma, Theta, and Vega). Review these in the results section to inform your trading strategies:

• Call Option Price: Displays the estimated price of the call option in USD.
• Put Option Price: Displays the estimated price of the put option in USD.
• Delta: Indicates the rate of change of the option price with respect to changes in the underlying asset’s price.
• Gamma: Measures the rate of change in Delta with respect to the underlying asset’s price.
• Theta: Represents the rate of decline of the option’s price with respect to the passage of time.
• Vega: Shows the option price’s sensitivity to volatility changes.

Conclusion

This comprehensive guide should enable you to input the necessary parameters and correctly interpret the resulting calculations for informed decision-making around options trading. Consistently accurate entries are vital to ensuring that your calculated results align with real-world data and scenarios.