Options Profit Calculator

Options Trading Guide

What is an Option?

An option is a financial derivative that gives the buyer the right, but not the obligation, to buy (Call) or sell (Put) an underlying asset at a predetermined price (strike price) on or before a specific date (expiry).

Call vs Put Options

Key Option Terminology

Strike Price: The price at which the option can be exercised. For Call buyers, profit starts above strike + premium. For Put buyers, below strike - premium.

Premium: The price you pay to buy an option or receive when selling. This is your maximum loss when buying, and maximum profit when selling (naked).

Intrinsic Value: The real value if exercised now. Call: Spot - Strike (if positive). Put: Strike - Spot (if positive).

Time Value: Premium - Intrinsic Value. Decays as expiry approaches (Theta decay).

Breakeven Point:
• Call: Strike Price + Premium Paid
• Put: Strike Price - Premium Paid

The Four Basic Option Strategies

1. Buy Call (Long Call):

• View: Bullish - expect price to rise
• Max Loss: Premium paid (limited)
• Max Profit: Unlimited (theoretically)
• Breakeven: Strike + Premium
• Best when: Strong upside expected, low volatility

2. Sell Call (Short Call):

• View: Bearish/Neutral - expect price to stay flat or fall
• Max Profit: Premium received (limited)
• Max Loss: Unlimited (very risky!)
• Breakeven: Strike + Premium
• Best when: Expect sideways/down move, high premium collection

3. Buy Put (Long Put):

• View: Bearish - expect price to fall
• Max Loss: Premium paid (limited)
• Max Profit: Strike - Premium (high potential)
• Breakeven: Strike - Premium
• Best when: Strong downside expected, hedging portfolio

4. Sell Put (Short Put):

• View: Bullish/Neutral - expect price to stay flat or rise
• Max Profit: Premium received (limited)
• Max Loss: Strike - Premium (high)
• Breakeven: Strike - Premium
• Best when: Want to buy stock cheaper, collect premium

Understanding Moneyness

In-The-Money (ITM):

• Call: Spot > Strike (has intrinsic value)
• Put: Spot < Strike (has intrinsic value)
• Higher premium, lower percentage gains

At-The-Money (ATM):

• Spot ≈ Strike (±1% usually)
• Most liquid, highest traded
• Balanced risk-reward

Out-of-The-Money (OTM):

• Call: Spot < Strike (no intrinsic value)
• Put: Spot > Strike (no intrinsic value)
• Lower premium, higher percentage gains/losses
• Can expire worthless

Real Trading Examples

Example 1: Buying Bank Nifty Call
Strike: 45,000 | Premium: ₹150 | Lot Size: 15
Investment: 150 × 15 = ₹2,250
Breakeven: 45,000 + 150 = 45,150
If expiry at 46,000: Profit = (46,000 - 45,000 - 150) × 15 = ₹12,750 (567% ROI!)
If expiry below 45,000: Loss = ₹2,250 (100% loss)

Example 2: Selling Nifty Put
Strike: 19,500 | Premium: ₹80 | Lot Size: 50
Premium Received: 80 × 50 = ₹4,000
Breakeven: 19,500 - 80 = 19,420
If expiry above 19,500: Keep full ₹4,000 (profit)
If expiry at 19,200: Loss = (19,420 - 19,200) × 50 = ₹11,000

Options Greeks - The Risk Measures

Delta (Δ): Rate of change of premium with respect to spot price. Call: 0 to 1, Put: -1 to 0. ATM ≈ 0.5.

Gamma (Γ): Rate of change of Delta. Highest for ATM options. Accelerates gains/losses.

Theta (Θ): Time decay - how much premium erodes daily. Always negative for buyers. Accelerates near expiry.

Vega (ν): Sensitivity to volatility changes. Higher for ATM options. Benefits buyers when volatility rises.

Common Mistakes to Avoid

• Buying deep OTM options: Low success rate, often expire worthless
• Holding till expiry as buyer: Theta decay kills premium in last week
• Naked option selling without hedge: Unlimited risk, can wipe account
• Ignoring volatility: Buy options when IV is low, sell when high
• Over-leveraging: Options can move 100-500%, use small position sizes
• No stop-loss: Even for option buyers, cut losses at 30-50%
• Fighting the trend: Don't buy calls in strong downtrend
• Ignoring liquidity: Illiquid options have wide bid-ask spreads

Advanced Strategies

Spreads: Buy and sell options simultaneously to reduce risk and cost. Bull Call Spread, Bear Put Spread, etc.

Straddle: Buy both Call and Put at same strike. Profits from big move in either direction.

Strangle: Buy OTM Call and Put. Cheaper than straddle, need bigger move to profit.

Iron Condor: Sell OTM Call and Put, buy further OTM options for protection. Profits in range-bound market.

Lot Sizes in Indian Markets (2026)

• Nifty 50: 50 quantity per lot
• Bank Nifty: 15 quantity per lot
• Fin Nifty: 40 quantity per lot
• Sensex: 10 quantity per lot
• Midcap Nifty: 75 quantity per lot
• Stock Options: Varies (usually 500-3000)

Pro Tips for Success

• Trade ATM or slightly OTM options for better probability
• As buyer, exit at 2x profit or before last 5 days to expiry
• As seller, exit at 50-70% profit, don't be greedy for last 30%
• Use options for hedging your equity portfolio (buying puts)
• Track open interest - increasing OI shows conviction
• Don't trade illiquid strikes with low volume
• Understand the impact of events (Budget, RBI policy) on volatility
• Paper trade first - options can be unforgiving for beginners

Risk Management is Everything

Options are leveraged instruments. A small move can result in 100-500% gains or total loss. Never risk more than 2-5% of your capital on a single trade. Use this calculator before every trade to understand your maximum risk and breakeven. Knowledge and discipline are your best friends in options trading!