Options Profit Calculator

August 16, 2021
Options Profit Calculator

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Options are financial derivatives that involve a buyer and seller where the buyer pays the premium for an option in return for the rights granted by the contract. Traders buy and sell options for speculation to hold a leveraged position, and Investors usually buy or sell options for hedging purposes to reduce the risk of their overall portfolio. 

Call option: Holders get the right to buy the underlying at the stated strike price by the expiration date called the expiry. The call option writer (i.e., the seller), on the other hand, has an obligation to sell the underlying. Usually, the call option buyers are bullish on the underlying stock. If their bullish outlook is realized, the stock price increases above the strike price, the holder (i.e., the buyer) can exercise the option, buy the stock at the strike price, and immediately sell the stock at the current market price for a profit. However, if the underlying stock price does not move above the strike price by the expiration date, the option expires worthless. The holder is not required to buy the shares but will lose the premium paid for the call.

Put option: Holders have the right to sell the underlying at the stated strike price by the expiration date called the expiry. The put option writer, on the other hand, has an obligation to buy the underlying. Buyers of put options are usually bearish on the underlying and want the stock price to decrease, and the put option is profitable when the underlying stock’s price is below the strike price. The value of holding a put option will increase as the underlying stock price decreases—conversely, the value of the put option declines as the stock price increases. The risk of buying put options is limited to the loss of the premium if the option expires worthless.

Options Profitability

For a call option buyer, profit is realized when his bullish outlook is realized, i.e., when the underlying stock’s price increases than the strike price. Alternatively, a put option buyer can profit when the underlying stock’s price falls. The exact amount of profit depends on the difference between the stock price and the option strike price at redemption.

A call option writer (seller) makes a profit if the underlying stock stays below the strike price. For a put option writer, the trader profits if the price stays above the strike price. An option writer’s profitability is limited to the premium they receive for writing the option (which is the option buyer’s cost).

Options Profit Calculator by MarketXLS (Excel Template)

This Options Profit Calculator Excel is a user-contributed template that will provide you with the ability to find out your profit or loss quickly, given the stock’s price moves a certain way. It also calculates your payoffs at the expiry and every day until the expiry.

The Excel template has some VBA code in it, which calls MarketXLS functions to pull the option chains automatically. In this Options Profit Calculator, all you need to do is enter the stock’s symbol, and the program will download all active options contracts and their details. After getting the option chain for the stock, this program will populate various dropdowns, charts, etc., for you to fill the legs of your option strategy.

There are no buttons to click to download the data; all you need to do is change the symbol in the ‘Options Profit Calculator Sheet .’ The data is automatically retrieved in the background. The template also creates a chart showing what your P&L position would be at the expiry date of your option strategy. With the Options Profit Calculator Excel template and options data from MarketXLS, you instantly know what is likely to be the maximum profit or loss for your options strategies for each day until the expiry.

This template also can rank the filtered options contracts on the specific expiry date. The ‘Assumptions sheet’ is where you fill in the weight percentage you want to assign to each option contract. For example, you could give 50% weight to the option’s premium, 20% volume, and 30% to spread. The template will then rank the option contracts accordingly. For the ranking algorithm to work, this options profit calculator template uses Python with a couple of data analytics modules installed on your machine. 

To get started with this template, you will need to have an active MarketXLS subscription with options data. 

You can browse hundreds of option contracts by simply clicking on the Expiry dates with real-time options data streaming in Excel. Get the Ranks of the filtered option contracts by your criteria and ranking weights like Low Premium, High Volume, Low Spreads, and more.

See Option Strategy payoff results until the day of the expiry, taking into account the time decay with Black Scholes Options Model. Create Option strategy charts, “profit” or “loss” box analysis, and other calculations at the click of a button. Scan all available options for Real Value and find the Overbought/Oversold Option contracts.

Once you can access historical options data and option chains from MarketXLS, you can enter your stock and choose your option strategy legs using pre-populated active options contracts.

If you want to know more about MarketXLS, then book a demo with us today. MarketXLS provides you with more than 500 stocks and markets related functions to help your investment research. Note: We only support US options at the moment. 

The Bottom Line

Options do provide many paths to profitability as they can be tailored to match the risk appetite. Still, at the same time, investors and traders need to be alert and well aware of their profitability and payoffs. For any investment to be successful proper research and strategy are fundamental. Once you’ve considered the possible scenarios and chosen your exit strategies for each case, it’s essential that you closely monitor your positions and follow through on your plan. Options trading is fast-paced, and it can be easy to get caught up in the moment and lose track of your long-term goals. Don’t let your emotions rule. Stick to your plan, and you are much more likely to see your profits grow over the long term.


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