Option strategy payoff calculator
This is part 4 of the Option Payoff Excel Tutorial. In the previous parts firstsecondthird we have created a spreadsheet that option strategy payoff calculator profit or loss for a single call or put option, given the strike price, initial option price and underlying price. Now we are going to expand it to also work with positions involving multiple options — strategies such as straddlescondorsbutterflies or spreads. Total profit or loss from an option strategy that involves multiple options also option strategy payoff calculator legs equals the sum of profit or loss of all these individual legs.
Knowing this will be very helpful when creating our option strategy payoff calculator. We will do that by expanding our existing spreadsheet and copying the inputs and formulas from column C to three other columns — D, E, F option strategy payoff calculator to get a total of four possible legs for our option strategies.
Because columns E-F are currently occupied by the contract size input and the combo box text inputs, we must move these to the right to make space for the new legs.
You can insert new column right before the existing column E by right clicking the label of column E and then selecting Insert from the menu that option strategy payoff calculator up. Do this three times to insert three columns. The contract size input and combo box data have shifted to option strategy payoff calculator H-I. Now we can simply copy the entire column C to columns D, E, F. The result should look like this:.
We must change the I2 to an absolute reference, so the copied cells in columns D, E, F still point to cell I2, the contract size input, which is the same for all legs.
I assume most readers are familiar with the difference between absolute and relative cell references — if not Google has plenty of good explanations. If you click on the I2 part of the formula in cell C9 and press the F4 key on your keyboard, the I2 cell reference will change from relative to absolute, which you will recognize by the dollar signs:.
Now you can copy cell C9 to cells D9, E9 and F9 and all option strategy payoff calculator will show correct results for the individual legs. One last thing which requires a little fixing is the new combo boxes in cells D3, E3, F3.
We must make sure each of the new combo boxes controls the correct leg, which quite likely is not the case at the moment. This setting decides where the combo box selection will be stored, which of course must match the particular leg, otherwise your combo box would control a wrong leg and the calculations would be incorrect.
Now all the individual legs should have correct calculations — test this by changing the different inputs and combo box selections. The last step is to calculate total payoff for the entire position, which is just sum of the four legs.
We can calculate it in cell G9, using the formula:. At the moment each column has its own underlying price input row 6but this input will always be the same for all legs.
You can change the hard typed robt optione binare goldeen currently 49 in cells D6, E6, F6 to a formula linking to cell C6 and perhaps make the cells green as a reminder that these should not be changed.
Now underlying price, effective for all legs, will be changed in cell C6 only. Alternatively, you can move the underlying price input somewhere else like we option strategy payoff calculator with contract size in cell I2 ; in such case you will also need to update the formulas in cells C8-F8 to reflect its new location.
Just option strategy payoff calculator the position cells C2-F2 to zero for any unused legs as a result, rows 8 and 9 in these columns should also be showing zero. Having started with a very simple calculation in part onenow in part 4 we have created quite an advanced spreadsheet which can calculate profit or loss for any combination of up to four legs and can be used to model a wide range of option strategies.
You could see that expanding the spreadsheet from single option to four legs was really just a matter of creating additional copies of the same column, but there were a number of small details which we had to check and fix, in order to make sure our calculations are correct.
In the next partwe will use our calculations to draw payoff diagrams for our strategies. If you don't agree with any part of this Agreement, please leave the website now. All information is for educational purposes only and may be inaccurate, incomplete, outdated or plain wrong. Macroption is not liable for any damages resulting option strategy payoff calculator using the content. No financial, investment or trading advice is given at any time.
Home Calculators Tutorials About Contact. Tutorial 1 Tutorial 2 Tutorial 3 Tutorial 4. Calculating Option Strategy Payoff in Excel. Option Strategy Payoff Calculation Total profit or loss from an option strategy that involves multiple options also called legs equals the sum of profit or loss of all these individual legs. Inserting New Columns Because columns E-F are currently occupied by the contract size input and the combo box text inputs, we must move these to the right to make space for the new legs.
The option strategy payoff calculator should look like this: In cell C9, the original formula is: If you click on the I2 part of the formula in cell C9 and press the F4 key on your keyboard, the I2 cell reference will change from relative to absolute, which you will recognize by the dollar signs: Repeat this with the combo boxes in E3 and F3.
We can calculate it in cell G9, using the formula: Next Steps Having started with a very simple calculation in part onenow in part 4 we have created quite an advanced spreadsheet which can calculate profit or loss for option strategy payoff calculator combination of up to option strategy payoff calculator legs and can be used to model a wide range of option strategies.
Select option strategy in the dropdown box see list of all 54 option strategy payoff calculator included:. If you are analysing a specific trade, you can enter strikes, position sizes and initial prices in the yellow cells. You can also set a specific underlying price and see values and profit or loss for individual options and the entire position at that price:.
In the top right corner you option strategy payoff calculator see maximum profitmaximum loss and risk-reward ratio. This is very useful for evaluating potential trades. You can also see break-even points and profit or loss at each strike:.
By default option strategy payoff calculator chart shows aggregate profit or loss for the entire position. You can option strategy payoff calculator display individual legs:. Detailed instructions are available in the user guide in pdfwhich you will also get.
If you want another strategy included, please contact us. One-time payment, yours forever. Does it work in my version of Excel? The calculator works in all versions of Excel from Excel 97 to Excel It was developed in Excel and tested in other versions. For older versions you may need to use a different version of the option strategy payoff calculator, which is also included.
Generally you need your software to support Excel formulas and macros. How do I pay? All payments are processed by PayPal, which provides world-class security and buyer protection.
Option Strategy Simulator — Simulates option strategies not only at expiration, but at any time, including intraday. Works with volatility, Greeks and more advanced option concepts. If you don't agree with any part of this Agreement, please leave the website now. All information is for educational purposes only and may be inaccurate, incomplete, outdated or plain wrong.
Macroption is not liable for any damages resulting from using the content. No financial, investment or trading advice is given at any time. Home Calculators Tutorials About Contact. Calculator 1 Calculator 2 Calculator 3 Calculator 4.
Option Strategy Payoff Calculator.