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Entering an open options trade as a new calculation

Posted Jun 12 2020

The situation: You have an open options position, but you haven’t made a calculation on Options Profit Calculator.

Note: We’re going to be making it a lot easier to update calculations, but for now it’s important to know how to adjust existing calculations to account for IV fluctuations.

Working example: TSLA long call

  • Long Call: TSLA 12th Jun ’20 $800 Call,
  • Price at purchase: $63.10 on 13th May 2020 / TSLA at $790.96
  • Price at time of writing: $59.60 on 25th May 2020 / TSLA at $826.75

Step 1. Create the calculation as if entering the position today

The purpose of this is to find the current IV of the option.

Create a new Long Call calculation, search for TSLA and select the 12th Jun $800 call.

It’s now worth $59.60.

Press Calculate, and the IV will be calculated based on current prices.
(To view the current IV, open the ‘Manual entry options’ panel. You can see the IV is 60.176.)

(The chart, shown below, shows P/L projections if the option were purchased now, for current prices, rather than the price we paid—Not what we want.)

Step 2. Update the Price per option to the price paid, and be sure to leave the IV at its current value.

Changing ‘Price per option’ from $59.60 to $63.10

The estimate matrix now reflects the current state of play:

In this example, the IV dropped from almost 73 to 60 in less than two weeks, and as a result it shifted what would have been a 8% profit, to a 5% loss.

The silvering lining, though, is you now have an up to date matrix to make an informed plan on whether to cut your losses or hold on.

You can view the calculation here:

Read about how changes to Implied Volatility impact options trades.