Put Option Calculator

How to Use the Put Option Calculator

Step 1: Enter the Current Stock Price

Begin by entering the current stock price in the designated input field labeled “Current Stock Price ($)”. This field requires a minimum value of $0.01, and you can input values in increments of $0.01. Ensure that this value accurately reflects the current market price of the stock for which you wish to calculate the put options.

Step 2: Input the Strike Price

Next, enter the strike price in the field labeled “Strike Price ($)”. The strike price is the price at which you have the right to sell the stock under the put option contract. Similar to the stock price, this field requires a minimum of $0.01 and increments of $0.01.

Step 3: Specify the Time to Expiration

Provide the time to expiration for the option in years by filling in the field labeled “Time to Expiration (Years)”. You must enter a value between 0.01 and 10 years, with increments of 0.01 years. This represents the duration until the option contract expires.

Step 4: Enter the Risk-Free Interest Rate

In the “Risk-Free Interest Rate (%)” input field, enter the applicable risk-free interest rate. This should be a value between 0% and 100%, with allowable increments of 0.01%. This rate often reflects the yield of a government bond of a similar duration as the option term.

Step 5: Input the Volatility

Provide the expected volatility of the stock in percentage terms within the field labeled “Volatility (%)”. The valid range for this input is from 0% to 200%, with steps of 0.01%. Volatility impacts the option’s pricing and is a measure of the stock’s expected price fluctuation.

Step 6: Number of Contracts

Finally, in the “Number of Contracts” input field, enter the number of option contracts you wish to analyze. This must be a whole number starting at 1. Each contract typically represents 100 shares of the underlying stock.

Step 7: Review the Calculated Results

• Put Option Price: This result gives you the price of a single put option contract, calculated based on the Black-Scholes model.
• Total Cost: This value represents the total cost of purchasing the specified number of put option contracts, priced in USD down to two decimal places.
• Break-Even Price: The break-even price indicates the stock price at which the gains from the put option offset the costs incurred from the purchase of the option.
• Maximum Profit: The maximum profit reflects the highest possible financial benefit you could achieve from the put option contracts, represented in USD.
• Maximum Loss: The maximum loss shows the worst-case financial outcome, equivalent to the initial cost of purchasing the put options.

Utilize these results to make informed decisions about your option strategies.