Options Profit Calculator

Options are contracts that give you the right (but not obligation) to buy or sell a stock at a specific price before a certain date. You pay a premium for this right. Each contract represents 100 shares of the underlying stock.

A call option gives you the right to buy stock at the strike price. You profit when the stock goes up. A put option gives you the right to sell stock at the strike price. You profit when the stock goes down. Both expire worthless if the stock does not move in your favor.

For a call, break-even equals the strike price plus the premium paid. For a put, break-even equals the strike price minus the premium paid. The stock must move beyond this price for you to make a profit at expiration.

When you buy options, your maximum loss is limited to the total premium you paid. This is the cost of the contract(s). If the option expires out of the money, you lose the entire premium but nothing more. This defined risk is one reason traders use options.

For calls, profit equals (stock price minus break-even) times 100 shares times number of contracts. For puts, profit equals (break-even minus stock price) times 100 times contracts. Call profit is theoretically unlimited. Put profit is capped since stocks cannot go below zero.