Sat, 03 Dec 2022


16 Nov 2022, 23:24 GMT+10

Expert traders who have been investing in stocks for many years easily leap trading and start to invest in derivates today.

But beginners are continuously facing problems because they do not know the right way to analyze the market options and formulate tips. Here the role of the option calculator comes in.

It is suggested that traders use option calculator who wants to get the proper market analysis. The option calculator depends on the Black Scholes model. Learn what the options calculator is and how to use the option calculator by reading the complete article.

Option calculator

An option calculator is an arithmetic calculation algorithm that analyzes and predicts trading market options. It depends upon the Black Scholes model.

While trading, if you want to calculate the implied volatility or theoretical values of premium options, you can easily use the option calculator.

Before diving into the details of how to use the option calculator, you must know the black Scholes model, which is the foundation of the option calculator.

Black Scholes model

The black Scholes models are used to compute the option, named Greeks. It involves complicated calculations, where the users only need to enter to key in input values. The best thing is that stock portals, trading platforms like binge trading platforms, and popular finance options have an inbuilt option calculator.

How to use the option calculator?

You must enter the values in the following required inputs if you want to use the option calculator.

Spot price the spot price is the current price of your underlying assets during trading. First, you must enter the spot's price value in the required field in the option calculator.

Interest rate

Here you should enter the risk-free prevailing rate in the economy. You can also put the 91 days treasury bill data from the Reserve bank of India website to get the interest rate values.


In this field at option calculator, you must put the expected dividend values on every share, where the stock pass to ex-dividends within the expiry time.

Number of days to expiry

It is the number of days remaining from the expiry date. You must also put the number of days left before the expiry date in the options calculator.

Along with the four above mandatory inputs, there are two additional inputs also that you have to input in the required field to use the option calculator.

Implied volatility

Putting the implied volatility to calculate the theoretical values of premium options is important. The values of VIX (Volatility Index) are inserted here as the right measures of trading market volatility.

Option price

To calculate the implied volatility, you must first determine the accurate market values for the price option.


The complete article concludes that the option calculator is used to find potential losses and profits at several prices. This calculator is also used to find how the trade is affected by implied volatility.

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