Jinsi ya kukokotoa Option Profit
Option Profit ni nini?
Options give the holder the right (not obligation) to buy (call) or sell (put) an asset at a set price (strike) before expiry. Profit depends on where the stock price is at expiry relative to strike and premium paid.
Fomula
Call profit = max(0, S−K) − premium | Put profit = max(0, K−S) − premium where S=stock price, K=strike price
- S
- Stock Price at Expiry ($)
- K
- Strike Price ($)
- P
- Premium Paid ($)
Mwongozo wa Hatua kwa Hatua
- 1Call profit at expiry = max(0, Stock − Strike) − Premium
- 2Put profit at expiry = max(0, Strike − Stock) − Premium
- 3Break-even (call) = Strike + Premium
- 4Break-even (put) = Strike − Premium
- 5Max loss = Premium paid × 100 × Contracts
Mifano Iliyotatuliwa
Ingizo
Call: Strike $150, Premium $5, Stock at $165
Matokeo
Intrinsic value $15, profit $10 per share ($1,000 per contract)
Ingizo
Call at expiry: Stock $145 (below strike)
Matokeo
Option expires worthless, loss = $500 premium paid
Maswali yanayoulizwa mara kwa mara
What's the difference between a call and a put?
A call gives the right to BUY at strike price (profits if stock rises). A put gives the right to SELL at strike price (profits if stock falls).
What is the maximum loss on an option?
Maximum loss is the premium paid. If the option expires worthless, you lose what you paid for it — but never more.
Why do people buy options instead of stocks?
Options provide leverage: control 100 shares with less capital. But they expire and have time decay, making them higher-risk, higher-reward instruments.