Frequently asked questions

How do I use this calculator?

Please view the 5-minute tutorial on how to make a basic calculation.

What formula is used for estimates?

The website uses the Black-Scholes formula to estimate returns at a range of dates and potential underlying prices. The estimations are based on implied volatility which is calculated from the current price of the selected options and the current price of the underlying stock or ETF.

For strategies employing multiple options, the estimated price of each option is calculated individually and combined to give gross profit or loss. The overall P/L for any given point in time and price is the exit value less the total entry value, which is calculated using the prices you enter or select.

What are the limitations of the calculator?

Where does the pricing information come from?

Stock and Options prices are sourced from reputable, free third party websites. Prices are delayed between 15-30 minutes.

Unfortunately for both of us, this site doen't make enough money to cover a subscription to a premium data feed.

I lost money on a trade and your calculator said I would make a profit.

Please read the limitations of calculator as above. The most common reason for this is that the company released a statement or an earnings report, and there was a drastic and sudden change in the implied volatility.