Option Chain Analyzer

Calculation Methodology

Assumptions
  • Cash-Secured Puts: You have sufficient cash to purchase 100 shares at the strike price if assigned. Capital reserved equals the strike price × 100.
  • Covered Calls: You already own 100 shares of the underlying stock. Your cost basis is the current stock price.
  • Premium: Calculations use the bid price, representing what you would receive if selling the option immediately.
  • Time Period: Returns are annualized based on days to expiration (assuming 365 days per year).
  • No Transaction Costs: Calculations do not include commissions, fees, or taxes.
Cash-Secured Puts Formula

When you sell a cash-secured put, you receive a premium and must reserve capital equal to the strike price to potentially buy 100 shares:

Annualized Return = (Premium / Strike Price) × (365 / Days to Expiration) × 100

Example: Sell a $50 strike put for $2.00 premium with 30 days to expiration:

  • Capital Reserved: $50 × 100 = $5,000
  • Premium Collected: $2.00 × 100 = $200
  • Return: ($2.00 / $50) × (365 / 30) × 100 = 48.7% annualized

Breakeven %: Shows how far the stock can drop before you'd be underwater if assigned.

Breakeven % = (Current Price - (Strike - Premium)) / Current Price × 100

Covered Calls Formula

When you sell a covered call, you receive a premium while owning 100 shares. Your return is based on your stock cost basis:

Annualized Return = (Premium / Stock Price) × (365 / Days to Expiration) × 100

Example: Stock trading at $100, sell a $105 strike call for $3.00 premium with 30 days to expiration:

  • Capital at Risk: $100 × 100 = $10,000 (your stock position)
  • Premium Collected: $3.00 × 100 = $300
  • Return: ($3.00 / $100) × (365 / 30) × 100 = 36.5% annualized

Breakeven %: Shows the upside potential if the stock rises above the strike.

Breakeven % = (Strike + Premium - Current Price) / Current Price × 100

Note: These calculations represent theoretical returns and do not guarantee actual results. Options trading involves substantial risk and is not suitable for all investors. Past performance does not indicate future results.