Put Option Calculator
A put option gives you the right, but not the obligation, to sell a stock at a specific price before expiration. Our Put Option Calculator helps you visualize your potential profit and loss when using this bearish strategy so you can make informed decisions before entering a trade.
Options Profit Calculator: Put Options
| Price | N/A | N/A | N/A | N/A | N/A |
|---|---|---|---|---|---|
| $225.00 | N/A | N/A | N/A | N/A | N/A |
| $210.00 | N/A | N/A | N/A | N/A | N/A |
| $195.00 | N/A | N/A | N/A | N/A | N/A |
| $180.00 | N/A | N/A | N/A | N/A | N/A |
| $165.00 | N/A | N/A | N/A | N/A | N/A |
| $150.00 | N/A | N/A | N/A | N/A | N/A |
| $135.00 | N/A | N/A | N/A | N/A | N/A |
| $120.00 | N/A | N/A | N/A | N/A | N/A |
| $105.00 | N/A | N/A | N/A | N/A | N/A |
| $90.00 | N/A | N/A | N/A | N/A | N/A |
| $75.00 | N/A | N/A | N/A | N/A | N/A |
How to Use the Put Option Calculator
To use the calculator effectively:
- Enter the Current Stock Price – The market price of the underlying stock.
- Enter the Strike Price – The price at which you have the right to sell the stock.
- Enter the Premium Paid – The cost of the put option per share.
- Enter the Expiration Date – When the option expires.
The calculator will return:
- Maximum Profit – If the stock falls to zero: (Strike - Premium) × 100.
- Maximum Loss – The premium paid.
- Breakeven Point – Strike price – premium.
- PnL Chart – A visual overview of potential outcomes.
Understanding the Long Put Options Strategy
A long put involves buying a put option because you expect the stock to fall in value. It’s a bearish strategy that profits when the stock price drops below the strike price.
- Risk: Limited to the premium paid.
- Reward: Increases as the stock price falls—maximum profit if the stock goes to zero.
- Breakeven: Strike price minus the premium.
This strategy can also serve as a form of insurance or a hedge for existing stock positions, although it's most commonly used to speculate on a decline in a stock’s price.
Example: Long Put Trade in Practice
Imagine you're bearish on XYZ stock and enter the following trade:
- Stock Price: $40
- Strike Price: $38
- Premium Paid: $1.50
- Expiration: 3 weeks
Outcomes:
- If XYZ drops to $30 by expiration: Profit = $38 - $30 - $1.50 × 100 = $650.
- If XYZ stays above $38: The option expires worthless, and your loss is $150 (premium paid).
- Breakeven occurs at $36.50 ($38 – $1.50).
The calculator provides a graph of this trade, showing your profit and loss across different final stock prices.
When to Use a Put Option Strategy
The long put is ideal when:
- You have a bearish outlook on a stock.
- You want to limit risk while taking advantage of potential downside.
- You prefer lower capital exposure than shorting stock.
- You want to hedge an existing long stock position.
The strategy becomes more profitable with a sharp decline in the underlying stock within the life of the option.