Options Calculator

What It Means: The strike price is the agreed-upon price at which you can buy (for a call option) or sell (for a put option) the underlying stock when the option is exercised.

How to Answer:

• If you're buying a call option, choose the price you'd like to pay for the stock in the future.
• If you're buying a put option, this is the price at which you want to sell the stock.
• A strike price closer to the current stock price is more likely to be *in the money*, while one farther away will be less expensive but riskier.

What It Means: The option premium is the price you pay to purchase the option contract. It represents the upfront cost of entering the options trade and is influenced by several factors, including time to expiration, volatility, and the underlying stock price.

How to Answer:

• Enter the cost of the option contract (per share). This will be displayed in the market for the specific contract you're interested in.
• A higher premium generally reflects higher volatility or more time until expiration.
• This cost is multiplied by the contract size (usually 100 shares per contract) to calculate the total premium you'll pay.

What It Means:

• A Call Option gives you the right to buy the underlying stock at the strike price before or on the expiration date.
• A Put Option gives you the right to sell the underlying stock at the strike price before or on the expiration date.

How to Answer:

• Choose "Call" if you expect the stock price to increase above the strike price.
• Choose "Put" if you expect the stock price to decrease below the strike price.
• Calls are used in bullish strategies, while puts are typically used in bearish strategies.