How can I use option Calculator?

How can I use option Calculator?

An option calculator helps determine the theoretical value of options and assess their risks and rewards. Here's a concise guide to using one:

Steps to Use an Option Calculator:

  1. Access the Calculator:
    • Use online tools or your brokerage platform’s built-in calculator.
  2. Input Required Data:
    • Underlying Asset Price: Enter the current market price.
    • Strike Price: Enter the option’s strike price.
    • Time to Expiry: Enter the time remaining until expiration (in days or years).
    • Volatility: Enter the annual volatility percentage.
    • Risk-Free Interest Rate: Enter the current risk-free rate (e.g., government bond yield).
    • Dividend Yield: Enter the annual dividend yield, if applicable.
  3. Choose Option Type:
    • Select "Call" for the right to buy or "Put" for the right to sell.
  4. Calculate:
    • Click "Calculate" to get the theoretical price and option Greeks (Delta, Gamma, Theta, Vega, Rho).

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