How the options profit calculator works
At expiration, a call is worth the greater of zero or the stock price minus the strike, and a put the greater of zero or the strike minus the stock price. A bought leg gains that value and has paid its premium; a sold leg has received its premium and owes that value. The calculator adds the legs together, multiplies by 100 shares per standard equity-option contract and by the number of contracts, and draws the result for every stock price.
Premium is entered per share, as option prices are quoted, so a premium of $2.50 is $250.00 for one standard contract before commissions and fees. A position you pay to open has a net debit, the premium paid minus the premium received; one you are paid to open has a net credit.
- Bought call: (max(0, price − strike) − premium) × 100 × contracts.
- Bought put: (max(0, strike − price) − premium) × 100 × contracts.
- Sold call or put: the same amount with the sign reversed.
- Standard multiplier: 100 shares per contract unless the contract is adjusted.
How to read the payoff chart
The horizontal axis is the stock price at expiration and the vertical axis is the position’s profit or loss in dollars. The line is the payoff: green above the zero line, where the position makes money, and red below it, where it loses. Dashed vertical lines mark each breakeven, and a dot marks the price at expiration you entered.
A line that turns flat means the profit or loss is capped beyond that strike. A line still rising or falling at the right edge is labelled unlimited profit or unlimited loss: above the highest strike only calls change the payoff, so a position with more bought calls than sold ones keeps gaining as the stock rises, and one with more sold calls keeps losing.
Buying versus selling an option
Buying an option costs the premium, and that premium is the most a single bought call or put can lose. Selling an option pays the premium up front, and that premium is the most it can make. What a sold option can lose depends on its type.
A sold put loses as the stock falls, but a stock cannot fall below $0, so its maximum loss is the strike minus the premium, times 100 per contract. A sold call loses as the stock rises, and a stock price has no upper limit, so a call sold on its own, with no shares held, shows an unlimited maximum loss. Selling options can also bring early assignment and margin requirements, which this calculator does not model.
Spreads, straddles and iron condors
A vertical spread buys one option and sells another of the same type and expiration at a different strike. The sold leg lowers the cost and caps the gain, so both the maximum profit and the maximum loss are fixed. Its breakeven uses the net premium: for a bull call spread, the lower strike plus the net debit per share; for a bear put spread, the higher strike minus it.
A long straddle buys a call and a put at the same strike, and a long strangle buys them at different strikes. Both need a large move in either direction and have two breakevens. An iron condor sells a put spread and a call spread together for a net credit: it keeps the credit if the stock ends between the two sold strikes, and the bought outer strikes cap its loss. The presets load each of these with round example numbers.
Worked example: long call
Buy one $100.00 call for $2.50 per share, and suppose the stock is at $110.00 at expiration. Each line shows the formula, then the numbers, then the result. Choose the Long call preset above to load these inputs.
At or below $100.00 the call expires worthless and the loss is the $250.00 paid. Above $102.50 every further dollar in the stock adds $100.00 per contract, so the maximum profit is unlimited.
- Net debit = premium × 100 × contracts = $2.50 × 100 × 1 = $250.00
- Breakeven = strike + premium = $100.00 + $2.50 = $102.50
- Profit or loss at $110.00 = (max(0, price - strike) - premium) × 100 × contracts = (max(0, $110.00 - $100.00) - $2.50) × 100 × 1 = $750.00
Worked example: bull call spread
Buy the $100.00 call for $4.00 and sell the $110.00 call for $1.50, one contract each, same expiration. The premium received pays for part of the premium paid, and in exchange the sold call caps the gain above $110.00. Choose the Bull call spread preset above to load these inputs.
The breakeven of a spread uses the net premium: the lower strike plus the net debit per share. Below $100.00 both calls expire worthless and the loss is the $250.00 net debit; at or above $110.00 the profit is the full $750.00.
- Net debit = premium paid - premium received = $4.00 × 100 × 1 - $1.50 × 100 × 1 = $250.00
- Breakeven = lower strike + net debit per share = $100.00 + ($4.00 - $1.50) = $102.50
- Maximum profit = (higher strike - lower strike) × 100 - net debit = ($110.00 - $100.00) × 100 - $250.00 = $750.00
Worked example: long straddle
Buy the $100.00 call for $3.00 and the $100.00 put for $2.80. A straddle pays when the stock moves far enough in either direction, so it has two breakevens: the strike minus and plus the total premium per share. Choose the Long straddle preset above to load these inputs.
The worst case is the stock ending exactly at $100.00, where both options expire worthless and the whole $580.00 is lost. Between $94.20 and $105.80 the position loses money at expiration; outside that range it gains.
- Net debit = call premium + put premium = $3.00 × 100 × 1 + $2.80 × 100 × 1 = $580.00
- Maximum loss at $100.00 = $3.00 × 100 × 1 + $2.80 × 100 × 1 = $580.00
- Lower breakeven = strike - (call premium + put premium) = $100.00 - ($3.00 + $2.80) = $94.20
- Upper breakeven = strike + (call premium + put premium) = $100.00 + ($3.00 + $2.80) = $105.80
What the calculator leaves out
The payoff is calculated at expiration only. Before expiration an option also carries time value, which depends on implied volatility, time remaining, interest rates and dividends, so a position closed early can show a different gain or loss than this chart at the same stock price. An option-pricing model with volatility scenarios answers that question; intrinsic payoff alone does not.
Commissions, fees, slippage, early assignment, margin and nonstandard contract multipliers are excluded. The calculator checks arithmetic; it does not estimate how likely a price is or recommend a trade. Verify the contract multiplier and settlement rules for the specific option you are evaluating.