Options Profit Calculator

Call option profit = (Exit Price - Entry Price) × 100 × Contracts. For example, if you buy a call for $3.00 ($300 per contract) and sell it for $5.50 ($550), your profit is $250 per contract. At expiration, intrinsic value = max(Stock Price - Strike Price, 0). Before expiration, option value includes both intrinsic and extrinsic (time) value. Our calculator uses Black-Scholes pricing to estimate option value at any point before expiration based on stock price, time remaining, and IV changes.

Put option profit = (Exit Price - Entry Price) × 100 × Contracts. If you buy a put for $2.50 ($250) and sell for $6.00 ($600), your profit is $350 per contract. At expiration, intrinsic value = max(Strike Price - Stock Price, 0). Before expiration, the put's value depends on how far in-the-money it is, time remaining, and implied volatility. Puts gain value as the stock drops and lose value as the stock rises. Time decay (theta) works against long put holders every day.

Greeks measure how option prices change with different factors: Delta measures price sensitivity to $1 stock moves (0-1 for calls, -1 to 0 for puts). Gamma measures how delta changes—higher near expiration and at-the-money. Theta measures daily time decay—how much value the option loses per day. Vega measures sensitivity to 1% IV changes. For example, a call with delta 0.50, theta -$15, and vega $25 will gain ~$50 if the stock rises $1, lose $15 tomorrow from time decay, and gain $25 if IV increases 1%.

Time decay accelerates as expiration approaches, especially for at-the-money options. A 60 DTE option might lose $5-10/day in theta, while a 7 DTE option could lose $20-50/day. This is because extrinsic value represents the probability of the option becoming profitable—as time runs out, that probability decreases. Theta is highest for at-the-money options and lower for deep in-the-money or out-of-the-money options. For long option holders, theta is your enemy. For option sellers, theta is your ally as you profit from time decay.

Delta represents the expected change in option price for a $1 move in the underlying stock. A call with 0.50 delta will gain ~$50 in value if the stock rises $1. A put with -0.30 delta will gain $30 if the stock drops $1 (or lose $30 if it rises). Delta also approximates the probability the option expires in-the-money: 0.70 delta ≈ 70% chance. At-the-money options have ~0.50 delta. Deep in-the-money options approach 1.00 delta (calls) or -1.00 (puts). Far out-of-the-money options have deltas near 0.

Higher IV means higher option prices because greater expected volatility increases the probability of large moves. If IV increases from 30% to 50%, option premiums can increase 30-50% even if the stock doesn't move. Vega measures this: an option with $25 vega will gain $25 in value if IV rises 1%. IV tends to spike before earnings, FDA decisions, and market crashes (when put demand surges). After these events, IV typically collapses (IV crush), causing option values to plummet even with favorable stock moves.

Buy calls when you're bullish on the stock and want leveraged upside exposure. Best conditions: (1) Strong bullish thesis with a catalyst, (2) Sufficient time until expiration (60-90 DTE recommended), (3) IV is relatively low (cheaper premiums), (4) Risk capital you can afford to lose. Avoid buying calls right before earnings (IV crush risk) or on stocks with declining momentum. Consider the stock's beta and typical volatility—low-volatility stocks rarely produce big option gains even with 5-10% stock moves.

Buy puts when you're bearish or want portfolio protection. For speculation: (1) Bearish thesis with a clear catalyst, (2) 60-90 DTE to avoid rapid theta decay, (3) Consider buying ITM puts for less time decay. For hedging: (1) Protective puts act as insurance, losing premium but protecting against crashes, (2) 10-20% OTM puts are common for tail-risk hedging, (3) Longer expirations (6-12 months) provide sustained protection. Puts are more expensive during market volatility because fear drives demand higher than greed.

Intrinsic value is the immediate exercise value: For calls = max(Stock Price - Strike, 0). For puts = max(Strike - Stock Price, 0). An $100 strike call is worth $5 intrinsic if the stock is at $105. Extrinsic value (time value) is the premium above intrinsic, representing the probability of further profitable moves. Total Option Price = Intrinsic + Extrinsic. At expiration, extrinsic value = $0 (only intrinsic remains). Before expiration, ATM options have maximum extrinsic value. Deep ITM options have mostly intrinsic value.

Black-Scholes provides good approximations for European-style options (most index options) but has limitations: (1) Assumes constant volatility (reality: vol changes constantly), (2) Assumes normal distribution of returns (reality: fat tails and gap risk), (3) Doesn't account for dividends well, (4) Doesn't capture volatility skew (OTM puts priced higher than model suggests). Despite these limitations, it's the industry standard for estimating option values and Greeks before expiration. American options (most stock options) have early exercise value not captured by basic Black-Scholes.