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# Options Profit Calculator

Options Type

Share Price

Option Price

Strike Price

Number of Contracts

Table of Content

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The options profit calculator calculates the option profit margin of an option contract in the stock exchange. Traders utilize the option contract to estimate the future price of an asset so that a handsome profit could be earned after a certain trade ends.Â

## What Is an Option Contract?

The option contract is a derivative or estimation and its value is derived from another asset like stocks, commodities, or Exchange Trade Funds (ETFs). You can estimate the profit margin for a call or put options with the options contract calculator to make your sale or purchase of the share a profitable one.Â

An option contract is classified into two classes:

#### A Call Option:

A call option reserves a right to the trader, but not a compulsion to purchase a stock at a specific price(strike price) over a period of time

#### A Put Option:

A put option reserve a right to the trader, but not a compulsion to sell a stock at a specific price(strike price) over a period of time

The price of the share dividend fluctuates on the basis of market trends. You need to use the option price calculator to decide about the call or put the option of the shares.

### Terminologies used in Option Strategy:

There are various terms used in the option strategy that is essential to understand for a profitable stock transaction.

#### Share Price:

The share price is the price of one share of all the saleable equity shares of the company. The share prices actually fluctuate over a period of time due to changing market conditions. The share price of a company varies on the basis of the performance of the company. Companies do define their share price on the basis of Base Point.

#### Strike Price:

The strike price is the price of the share at which the buyers and seller mutually agreed to trade an option. The strike price may be more or less than the market price of the share. It is critical to identify the strike price while trading the shares. It is best to use the options profit loss calculator before estimating the strike price of a particular share.Â

#### Option Price:

The option price is the premiums and it is the difference between the current share price and strike price. To find an optimal intrinsic value of the option use the stock options calculator to identify the profit/loss in the share transaction.

#### The Number of Contracts:

One option trade is called a contract and each option represents 100 shares of the underlying stock. Estimating the number of the contract once to be traded should be calculated by the options profit calculator.

### How to Compute the Options Profit?

Suppose the Share price of the XYZ trading company is $50 and the option price is$1. You are aiming to purchase the 5 contracts of the call option (each contract is 100 shares). The strike price is around $60 and the share price has risen to$70 since you purchased the shares. The profit margin can be calculated as:

SolutionÂ

The total cost = (option processed) (Number of contracts)

The total cost = ($1) (500) =$500

Current stock value = (500) ($70) Current stock value =$35000

Strike Price = 500 x $60 Strike Price =$30,000

Option Profits = Strike PriceCurrent stock value – Cost = 30000-35000 – 500

Option ProfitsÂ  = \$-5500

### Working of Options Profit Calculator:

For making a profitable stock option, just follow the steps when using the profit loss calculator.

Input:

• Select the option typeÂ
• Enter the Share price, Option price,Â
• Now enter the Strike Price and the Number of contracts
• Press the calculate button

Output:

• Options profit (Either positive or negative)

### References:

From the source of economictimes: Stock Option Profit, Options Profit Loss

From the source of investopedia.com: Profit With Options,Option Profitability