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Investing in stock options can lead to outsized returns and are a great way to hedge against down trending market, but options trading can sometimes seem overwhelming, especially when the market is volatile. This is when an options calculator eases an investor’s complications to a large extent.
Based on the Black Scholes model, this arithmetic calculating algorithm helps an options trader predict and analyze options. Just like the Black Scholes model helps calculate Options Geeks by entering values, an Options Calculator helps estimate the intrinsic value of an options premium or implied volatility. This factor is critical to determining the options strategy to be followed. An options calculator is useful for determining options pricing and strike price dependent on expiry date.
So, to devise a perfect options trading strategy, one must know the best options calculators and how to use them to get the maximum rate of return.
5 Best Options Calculators And How To Use Them For Options Trading
Mandatory inputs to enter in an options calculator
Generally, one must enter four required inputs before using an Options calculator.
- Spot-Price: It is the current market price of the underlying asset.
- Interest rate: It is the risk-free interest in the economy.
- Dividend: The expected value of dividend per share when a stock goes ex-dividend within the period of expiry.
- The number of days before expiry: Indicates the number of days left before the options’ expiration dates.
Besides these, premium implied volatility has to be used as the fifth input to calculate the theoretical value of options.
- Implied Volatility: The volatility Index value needs to be put over here to get a reliable measure of market volatility.
Further, to get implied volatility, options price needs to be entered as the fifth input.
Best options calculators In The Market
Often, investors are perplexed about which options strategies to employ in their trades to maximize profit while remaining in their comfort zones. The Options Profit Calculator was created to address the impending challenge that an option trader has to face regularly. You can input many different strategies here including a call spread, call and put, call spread, iron butterfly and more.
This incredible tool provides traders with a simple platform on which they can compare various options trading strategies and quickly determine which strategy best suits them and the market’s sentiment. Almost all strategies are supported, from simple ones like the covered calls to advanced ones like Iron condor. Besides that, their unique ROI table allows any profitable option trader to determine their expected return on investment on any given day and at any given price, making strategy selection way easier.
Dinkytown.net is one of the best options calculators in the market and is entirely free to use. It is completely updated with the latest 2022 rules, regulations, and content and is well equipped to help investors in the options trading journey by letting them know the stock options’ final year values.
Moreover, you can also determine the value of options by year. As an options trader, you have to enter a set of inputs. They include Current stock price, stock appreciation, i.e., the annual rate of return you expect from the stock underlying the options, number of options granted, stock price, and the number of years you wish to hold the stock. Once you do this, you can see the information you need. A summary report of all the information is also provided.
The Montréal Exchange is one of the country’s leading derivative exchanges, and it offers a variety of tools, including the Options Calculator. This calculator will tell options traders whether they are overpaying for their options.
Furthermore, one can learn about various other critical trading-related factors. These include the theoretical price of the call option they just purchased, how much profit they can make if the stock price rises by a certain percentage, or how much time value they will lose per day if the stock fails to gain traction. Whether stock or an ETF, this options calculator will always serve the purpose. One only needs to enter the required fields to get the required information.
The Cboe Options Calculator will be handy for anyone currently learning the language of options. This intuitive and easy-to-use tool, powered by Cboe’s All Access APIs, is beneficial for both new and seasoned traders to the same extent.
It lets the options traders perform many functions like customizing their inputs, and selecting different symbols, to generate theoretical prices of options or calculate Geek values. All this information is sufficient to take the trader’s level of understanding up a notch. The traders only need to provide inputs like symbol, options type, strike price, and so on to get essential data like Theoretical Price, Theta, Gamma, etc. within seconds.
The OptionStrat options calculator, in conjunction with its visualizer, enables options traders to create options strategies in real-time. As a result, instead of scrolling down through lengthy option chains, users can select a stock, the expiration date, and the strike price to view statistics on their trades. The trade cost, maximum potential profit and loss, breakeven price levels, chances of generating profits, net Geeks, estimated profit/loss in tabular or graphic form, and so on are all provided.
Furthermore, everything is instantly updated; one only needs to drag the strikes to reposition their trades or adjust the IV to see how it affects the trade. To ace options trading, it is essential to deploy correct options strategies.
Proper options trading strategies can only be devised when one can correctly comprehend the available market information. Options calculators ensure this and therefore are an essential tool for anyone trading options. Users need to assess what kind of information they have or require and can accordingly use any of the options trading calculators mentioned above.
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