This Call Option Calculator helps you determine the potential profit from buying a call option on a stock.
Call Option Calculator
How to use the Call Option Calculator
Enter the required fields with the specified parameters:
Current Stock Price: the price of the stock today.
Strike Price: the set price at which the call option can be bought.
Volatility: the expected volatility of the stock’s price (in percentage).
Risk-free Rate: the theoretical rate of return of an investment with zero risk (in percentage).
Time to Expiry: the time until the call option expires (in years).
After filling in the values, click on ‘Calculate’ to get the price of the call option.
How the Calculator Works
The calculator uses the Black-Scholes model to determine the theoretical price of a call option based on the inputs provided. It takes into account the current stock price, strike price, volatility, risk-free interest rate, and the time to expiration to calculate the price.
Limitations of the Calculator
The calculator assumes constant volatility and interest rates over the option’s life, which may not reflect real market conditions. Dividends and transaction costs are not considered. It should be used for educational purposes and as a starting point for further analysis rather than as a definitive investment tool.