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When calculating the profit on a call option, there are two different scenarios depending on whether you are the buyer or the seller of the option. When determining the profit for the call option buyer we need to take into account to cost of the premium. This is the seller’s to keep no matter what happens. Call Option Premiumįor receiving the right to buy the underlying shares, the call option buyer must pay to the seller a premium. If you’re a more advanced trader, you will want to check out these articles. If you’re new to options, you may want to check out my 11,000 word beginner guide by clicking the button below. On the other hand, the seller of a call option has an obligation to sell the stock if the buyer exercises the option. Up until the contract expires, the buyer of a call has the right to purchase the stock at the agreed price. The contract will be for the right to purchase a certain stock at a certain price, up until a certain date (called the expiration date). What Are Call Options?Ī call option is a contract between a buyer and seller.
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In today’s article, I’ll show you just that and even provide a nice calculator for you that you can download and use for yourself.
#Easy stock profit calculator how to
Long calls are probably the easiest strategy for beginners to understand but you may be wondering how to calculate the profits?
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Options are increasing in popularity by the day due to commission free brokers such as Robinhood and celebrity day traders like Dave Portnoy. Read the article or jump straight in and download the calculator below:ĭownload The Call Option Profit Calculator This free call option profit calculator will allow you to visualize the payoff graph and see the profit at various price points.