How to Use an Options Profit Calculator

What is an option profit calculator?

One of the most important tools for options traders is an options profit calculator, which enables you to see your potential gains and losses for a specific option strategy. This will allow you to visualize whether the strategy is consistent with your expectations for the underlying stock. Before you enter a trade, the options profit calculator tool gives you the chance to fine-tune your strategy as necessary to achieve the best possible risk/reward ratio. Additionally, you can be more assured in your trade because you conducted the necessary research before investing your capital.

How does the Market Chameleon options profit calculator work?

To make your life easier, you can run the options profit calculator right from the option chain. Simply select the option contracts by clicking on the options prices and the tool will populate the relevant information for you into the calculator. Once you have selected the option contract or multi option combinations you can hit calculate to generate a visual graph of the profit and losses for your strategy. Then you can make adjustments to optimize your trading strategy.

How can you find the options profit calculator in Market Chameleon?

To launch an options profit calculator on the Market Chameleon platform, you must first get to the option chain for your stock.

1. Type in a symbol in the search box and then click Search. As you can see, in the image the symbol AAPL was entered.

2. After you type in the symbol, you will arrive at the main page (AAPL in this example). Select Option Chain from the left hand side menu bar as shown in the image.

Selecting Option Contracts to enter into the options calculator

First you want to select the option expiration to pick your option contracts. You can click on the expiration on the left hand selection box as shown below under "Select Expiration". After you click on the expiration date, the option chain for that expiration will display to the right hand side. In the image below the 20-Jan-23 Expiration was clicked, resulting in the option chain to display options that expire 20-Jan-23 on the right side.

You can select specific option contracts (or multi option contracts for a strategy) to add to your options calculator by clicking on any option price (Bid or Ask) as shown in the screenshot below.

After you click on an option price, the options profit calculator will automatically appear on top of the option chain as shown below with your selection.

Note: you can click on more bid or ask cells on the option chain and the system will automatically populate that option into the options profit calculator.

After you have selected your options of interest, click the Calculate button, and the profit/loss graph will be generated based on the calculated option value at expiration (see screenshot below). The diagram shows the profit area in green and the loss area in red to give you a quick visual of how the option contracts will perform across a wide range of potential prices. Note: You can make adjustments in the table to the option ratio, implied volatility assumptions, strikes, buy vs sell, stock position, price etc.. and then recalculate the profit/loss for your options strategy. Note: You can make adjustments in the table according to your own analysis and then recalculate the profit/loss for your options strategy.