Call option and put option calculation


This is because the option will always have some amount of time value call option and put option calculation with it. April 23, at 1: If you have sold and option or holding on to an option which is OTM, then you can let just expire without worrying about Sq off on expiry. August 29, at 8: While not necessary for a simple calculation like this one, it is a good idea to somehow graphically differentiate input and output cells, especially when you are building a more complex spreadsheet.

Some of them are as follows:. May 15, at For any underlying price smaller than or equal to 45 it should return zero; for values greater than 45 it should return the difference between cells C6 and C4. In other words, do not buy a call option or do not sell a put option when you sense there is a chance for the markets to go down. Now we need to implement this formula in Excel.

November 16, at 9: It is a function that calculates how much money we make or lose at a particular underlying price. My doubt here is that how can a seller sell a contract before expiry as he has no right only the buyer , or it was due to he was in indraday and short on call option??

The calculation provided by karthik in chapter 3 is for expiry calculation on expirt date. November 15, at 3: Irrespective of how the spot value changes, the fact that I have paid Rs.

Exercising and squaring off are two different aspects. This is the cost that I have incurred in order to buy the Call Option. Thanks for your patience.

Selling an option makes sense when you expect the market call option and put option calculation remain flat or below the strike price in case of calls or above strike price in case of put option. Thats the beauty of derivatives — you can buy and sell a contract anytime you wish and not really wait for expiry! Is it due to difference in premium received or in other words due to moneyness of the option? February 1, at November 14, at 5:

Can the option writer square off his position and take the profit of 8 Rs? May 26, at 5: To make profit should I sell the same contract for a higher premium say Rs.

We certainly hope to keep the future chapters as easy and lucid as the previous ones have been. September 10, at 7: Crudely put, some Option Greeks tends to increase the premium, while some try to reduce the premium.