How to Calculate Options Profit and Loss
Options profit and loss depends on the stock price at expiration relative to the strike price and premium paid or received. For long positions, profit occurs when the option is sufficiently in-the-money to overcome the premium paid. For short positions, profit occurs when the option expires worthless or can be bought back for less than received.
This calculator handles all four basic options positions: long calls, long puts, short calls, and short puts. Enter your strike price, premium, and expected stock price at expiration to see the exact P&L.
Options P&L Formulas
- 1Intrinsic Value = max($112 - $100, 0) = $12
- 2P&L per share = $12 - $5 = $7
- 3Total P&L = $7 × 100 = $700
- 4ROI = $700 / $500 = 140%
- 5Break-even = $100 + $5 = $105
- 6Max Loss = $5 × 100 = $500 (premium paid)
P&L Summary for All Basic Positions
| Position | Max Profit | Max Loss | Break-Even | Outlook |
|---|---|---|---|---|
| Long Call | Unlimited | Premium paid | Strike + Premium | Bullish |
| Long Put | Strike - Premium (×100) | Premium paid | Strike - Premium | Bearish |
| Short Call | Premium received | Unlimited | Strike + Premium | Neutral/Bearish |
| Short Put | Premium received | Strike - Premium (×100) | Strike - Premium | Neutral/Bullish |
Before You Trade: Check These
- Long options have defined risk (max loss = premium) but time decay works against you
- Short options collect premium but face potentially large losses
- Spreads combine long and short options to define both risk and reward
- Implied volatility affects option prices significantly; high IV means expensive premiums
- Most options are closed before expiration rather than held to expiry
Options trading involves substantial risk. Long options can lose 100% of the premium paid. Short options can have losses exceeding the premium received. Understand the Greeks (delta, gamma, theta, vega) and their impact on your position before trading.