How options profit is calculated
At expiration an option is worth only its intrinsic value: what you would gain by exercising it. A call is worth how far the stock is above the strike; a put is worth how far it is below. Your profit is that value minus the premium you paid, multiplied by the number of shares the contract covers, which is 100 for US stock options.
Long call P/L = (max(Stock − Strike, 0) − Premium) × 100 × Contracts Long put P/L = (max(Strike − Stock, 0) − Premium) × 100 × Contracts
Selling an option flips the sign: you keep the premium and owe the intrinsic value. A multi-leg strategy is just the sum of its legs.
Tip: before expiry an option also has time value. Add the days left and implied volatility under More options to see what the position is worth today, not just at expiry.
Worked example: single call
The stock is at $100, one contract (100 shares) per leg, no fees, values at expiry.
You think the stock will rise, so you buy one $100 call for $5.00 a share.
- Cost: 5.00 a share × 100 = $500 paid.
- Max loss $500; max profit unlimited.
- Break-even at expiry: $105.00.
- At $120 at expiry, the $100 call is worth $20.00 a share. P/L = (20.00 − 5.00) × 100 = $1,500 profit.
You think the stock will fall, so you buy one $100 put for $4.00 a share.
- Cost: 4.00 a share × 100 = $400 paid.
- Max loss $400; max profit $9,600.
- Break-even at expiry: $96.00.
- At $85 at expiry, the $100 put is worth $15.00 a share. P/L = (15.00 − 4.00) × 100 = $1,100 profit.
You own 100 shares bought at $100 and sell one $110 call against them for $2.00.
- Credit: 2.00 a share × 100 = $200 received, on top of $10,000 for the shares.
- Max loss $9,800; max profit $1,200.
- Break-even at expiry: $98.00.
- At $115 at expiry, the 100 shares are worth $115 each; the $110 call is worth $5.00 a share. P/L = (115 − 100) × 100 + (2.00 − 5.00) × 100 = $1,200 profit.
You sell one $95 put for $2.00 and keep $9,500 in cash in case you have to buy the shares.
- Credit: 2.00 a share × 100 = $200 received.
- Max loss $9,300; max profit $200.
- Break-even at expiry: $93.00.
- At $90 at expiry, the $95 put is worth $5.00 a share. P/L = (2.00 − 5.00) × 100 = $300 loss.
You own 100 shares bought at $100 and buy one $95 put for $2.00 as insurance.
- Cost: 2.00 a share × 100 = $200 paid, on top of $10,000 for the shares.
- Max loss $700; max profit unlimited.
- Break-even at expiry: $102.00.
- At $85 at expiry, the 100 shares are worth $85 each; the $95 put is worth $10.00 a share. P/L = (85 − 100) × 100 + (10.00 − 2.00) × 100 = $700 loss.
You buy the $100 call for $5.00 and sell the $110 call for $2.00.
- Cost: 5.00 − 2.00 = 3.00 a share, × 100 = $300 paid.
- Max loss $300; max profit $700.
- Break-even at expiry: $103.00.
- At $106 at expiry, the $100 call is worth $6.00 a share; the $110 call expires worthless. P/L = (6.00 − 5.00) × 100 + (2.00 − 0.00) × 100 = $300 profit.
You buy the $100 put for $5.00 and sell the $90 put for $2.00.
- Cost: 5.00 − 2.00 = 3.00 a share, × 100 = $300 paid.
- Max loss $300; max profit $700.
- Break-even at expiry: $97.00.
- At $94 at expiry, the $100 put is worth $6.00 a share; the $90 put expires worthless. P/L = (6.00 − 5.00) × 100 + (2.00 − 0.00) × 100 = $300 profit.
You expect a big move but not its direction, so you buy the $100 call and the $100 put for $5.00 each.
- Cost: 5.00 + 5.00 = 10.00 a share, × 100 = $1,000 paid.
- Max loss $1,000; max profit unlimited.
- Break-evens at expiry: $90.00 and $110.00.
- At $120 at expiry, the $100 call is worth $20.00 a share; the $100 put expires worthless. P/L = (20.00 − 5.00) × 100 + (0.00 − 5.00) × 100 = $1,000 profit.
A cheaper bet on a big move: you buy the $105 call and the $95 put for $3.00 each.
- Cost: 3.00 + 3.00 = 6.00 a share, × 100 = $600 paid.
- Max loss $600; max profit unlimited.
- Break-evens at expiry: $89.00 and $111.00.
- At $85 at expiry, the $105 call expires worthless; the $95 put is worth $10.00 a share. P/L = (0.00 − 3.00) × 100 + (10.00 − 3.00) × 100 = $400 profit.
You expect the stock to stay put, so you sell the $100 call and the $100 put for $5.00 each.
- Credit: 5.00 + 5.00 = 10.00 a share, × 100 = $1,000 received.
- Max loss unlimited, because the stock can keep rising; max profit $1,000.
- Break-evens at expiry: $90.00 and $110.00.
- At $105 at expiry, the $100 call is worth $5.00 a share; the $100 put expires worthless. P/L = (5.00 − 5.00) × 100 + (5.00 − 0.00) × 100 = $500 profit.
You expect a quiet market and sell the $105 call and the $95 put for $3.00 each.
- Credit: 3.00 + 3.00 = 6.00 a share, × 100 = $600 received.
- Max loss unlimited, because the stock can keep rising; max profit $600.
- Break-evens at expiry: $89.00 and $111.00.
- At $100 at expiry, the $105 call expires worthless; the $95 put expires worthless. P/L = (3.00 − 0.00) × 100 + (3.00 − 0.00) × 100 = $600 profit.
You expect the stock to stay in a range. You sell the $95 put and the $105 call for $2.50 each, and buy the $85 put and the $115 call for $1.00 each as protection.
- Credit: 2.50 + 2.50 − 1.00 − 1.00 = 3.00 a share, × 100 = $300 received.
- Max loss $700; max profit $300.
- Break-evens at expiry: $92.00 and $108.00.
- At $110 at expiry, the $85 put expires worthless; the $95 put expires worthless; the $105 call is worth $5.00 a share; the $115 call expires worthless. P/L = (0.00 − 1.00) × 100 + (2.50 − 0.00) × 100 + (2.50 − 5.00) × 100 + (0.00 − 1.00) × 100 = $200 loss.
Break-evens, max profit and max loss
At expiry the P/L line is made of straight segments that only bend at strike prices, so the extremes and break-evens can be found exactly rather than estimated. The calculator checks every strike and the direction of the line beyond the highest one. If you are left holding uncovered short calls, the line keeps falling as the stock rises and the max loss is unlimited; a long call, or long stock, makes max profit unlimited.
Covered calls and protective puts
Add a stock leg to model positions that combine shares and options. A covered call (100 shares plus one short call) caps your upside at the strike plus the premium; a protective put (100 shares plus one long put) puts a floor under your loss at the strike minus the premium.
Common mistakes
- Forgetting the ×100. A $2.00 premium costs $200 per contract.
- Reading the expiry chart as today's value. Before expiry, options also carry time value, so a position can show a loss on your broker's screen even when it would profit at expiry, and the other way round.
- Assuming you hold to expiry. American-style options can be exercised early, and short legs can be assigned, especially around dividends.
- Ignoring per-contract fees. On a four-leg iron condor they are charged on every contract, and again to close.
Assumptions
How this calculator works. The main result is the value at expiration, using intrinsic value. The optional “today” view prices each option with Black-Scholes (European exercise, no dividends) from today's stock price, the days left, one implied volatility for every leg and an interest rate. One contract = the shares-per-contract you set (100 by default). Fees are charged once per contract to open; closing, exercise and assignment fees, dividends and early assignment are not modelled. Strategy presets use example premiums, not market prices.
