Notitia
An option gives the right, without the obligation, to buy (call) or sell (put) an asset at a set price, the strike, until a given date. That right costs money: the premium.
Payoff at expiry only, before commissions. Before expiry, an option is also worth its time value, which depends on volatility.
Calculated in your browser, nothing is stored. Education, not investment advice.
A payoff diagram shows, for every possible price at expiry, the strategy’s profit or loss. It is the basic tool for understanding what you are really buying.
A call buyer risks little and can gain a lot, but loses the premium in most scenarios where the price rises only a little.
The buyer pays the premium and has limited risk. The seller collects the premium and takes the opposite risk, sometimes unlimited (a naked call). Covered calls and short puts are seller strategies that trade upside for income.
This calculator shows value at expiry. Before then, an option is also worth its time value, which depends on implied volatility and time left: a model such as Black-Scholes computes it.
The price at expiry at which the strategy neither gains nor loses: strike plus premium for a call, strike minus premium for a put.
It is insurance: it sets a minimum selling price. The premium is the price of that protection.
Buying a call and a put at the same strike: you gain if the price moves sharply, either way, by more than the total premiums.