Calculate profit/loss and break-even for long call and long put options.
1 contract = 100 shares
Formulas: Long Call P/L = (Stock Price − Strike − Premium) × 100 × Contracts Long Put P/L = (Strike − Stock Price − Premium) × 100 × Contracts Max Loss = Premium × 100 × Contracts
Understanding Options
A call option gives you the right to buy a stock at the strike price before expiration. A put option gives you the right to sell. You pay a premium for this right.
Key Terms
Strike Price: The price at which you can buy (call) or sell (put) the stock
Premium: The cost of buying the option contract
Break-Even: Strike + Premium (call) or Strike − Premium (put)
In the Money: Stock > Strike (call) or Stock < Strike (put)