In this example, the 145 calls are out of the money initially, so notice how the loss increases as time elapses toward expiration this is due to time-value erosion. In Figure 2, the profit and loss calculations (shown in the blue box ) for the date of entry (orange line), the halfway point (blue line), and expiration (purple line) are estimated, assuming the price of the underlying stock remains unchanged from its current level. These probability calculations will change if you alter the lower and upper targets by either moving the slider bars with your mouse or by typing in specific values for the lower target and upper target. Assuming the two settings above, this would equal 1 minus the sum of the two previous calculations (1 – (.4756 +. Probability of the option expiring between the upper and lower slider bar.Since 145 is the call you’re considering for purchase, this is also the same as the probability of the option expiring in the money. Probability of the option expiring above the upper slider bar. If you set the upper slider bar to 145, this would equal the approximate Delta of the 145 call (.3762) or 37.62%.Probability of the option expiring below the lower slider bar. If you set the lower slider bar to 140, this would equal 1 minus the approximate Delta of a 140 strike call or (1 –.Now, if you select the Trade & Probability Calculator tab, you’ll see the following additional calculations are done automatically and displayed graphically (shown in the green box in Figure 2): These values are also automatically calculated for many other option strategies although the formulas are different. The maximum gain for long calls is theoretically unlimited regardless of the option premium paid, but the maximum loss and breakeven will change relative to the price you pay for the option. Breakeven (BE) = strike price + option premium (145 + 3.50) = $148.50 (assuming held to expiration).The following price calculations (shown in the purple box) are done automatically: Suppose you’re considering the purchase of 1 IBM 145 Call at a price of $3.50 when the price of IBM is $140.92 (see Figure 2). Environmental, Social and Governance (ESG) Investing.Bond Funds, Bond ETFs, and Preferred Securities.ADRs, Foreign Ordinaries & Canadian Stocks.Environmental, Social and Governance (ESG) ETFs.Environmental, Social and Governance (ESG) Mutual Funds.Benefits and Considerations of Mutual Funds.Fidelity Investments Canada ULC will not be liable for any losses or damages arising from any errors or omissions in any information or results, or any action or decision made by you in reliance on any information or results. You should consult your professional advisor before taking any action.įidelity Investments Canada ULC does not make any express or implied warranties or representations with respect to any information or results in connection with this calculator. Investments should be evaluated according to an investor's investment objectives and risk tolerance. The information provided herein should not be interpreted as financial, investment, tax, legal or accounting advice. The deduction of advisory fees, brokerage or other commissions and any other expenses that would have been paid may not be reflected in the calculation results. All charts and illustrations are used to illustrate the effects of growth of a hypothetical investment based on inputs provided by the user and are not intended to reflect future values of any fund or returns on investment in any fund. This calculator is provided for informational purposes only.
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