Select a preset strategy to auto-fill inputs, or build your own position below. Each strategy shows its risk profile, max profit/loss, and P&L chart at expiration.
| Type | Side | Strike | Premium | Contracts | Action |
|---|
Options lose roughly one-third of their time value in the last 30 days before expiration. This "theta decay curve" makes buying short-dated options expensive and selling them profitable. If you're buying options, consider 45–60 DTE to minimize theta drag. If selling, the 30–45 DTE sweet spot maximizes daily decay while limiting gamma risk from sudden moves.
Two options with the same strike and expiration can have wildly different premiums depending on IV. Before earnings, IV can spike 50–100%, inflating premiums. After the announcement, IV crushes back to normal — often causing losses even if you predicted the direction correctly. Always check IV percentile before entering a trade: buy when IV is low (below 30th percentile) and sell when IV is high (above 70th percentile).
Vertical spreads (bull call, bear put) cap both your max loss and max profit. While they reduce potential upside, they dramatically improve capital efficiency and risk management. A bull call spread might cost $2.00 with a max profit of $3.00 — a 150% return if the stock moves above the short strike. The equivalent naked call might need a $5+ move for the same return, with higher theta and vega exposure.
This calculator computes option profit and loss at expiration using standard payoff formulas. For calls: payoff = max(0, underlying − strike) − premium. For puts: payoff = max(0, strike − underlying) − premium. Multi-leg strategies sum the payoffs of each individual leg across the price range.
Greeks are estimated using a simplified Black-Scholes model assuming a risk-free rate of 5% and no dividends. Delta and gamma use the standard normal CDF/PDF, theta includes both time decay and risk-free rate components, and vega measures sensitivity to implied volatility. These are approximations for educational purposes — for real trading, use your broker's Greeks which incorporate volatility skew and term structure.