Option Price Calculator

The option price calculator is an arithmetic calculating algorithm, which is used to speculate and it also helps us to analyze options.

The option calculator is used to calculate the theoretical price of an option’s premium so it also can be called an option premium calculator which is based on the Black-Scholes Model.

What Is Black Scholes Model?

A Black-Scholes calculator is an online tool that can be used to determine the fair price of a call or put option based on the Black Scholes option pricing model. You have to enter the prices of stock price, strike price, interest rate(%), volatility(%), and the term (in days).

How To Use The Option Price Calculator?

To use the option calculator, you must enter the following mandatory inputs:

• Spot price: A Spot price is the current price of an underlying asset.

• Strike price: The strike price of an option is the price at which a put or call option can be exercised.

• Interest rate: Here, you need to put the risk-free prevailing rate in the economy. You can put the 91-day Treasury bill data from the RBI (Reserve Bank of India) website for the interest rate price., Usually (10%).

• Term (in days): It is the number of days left before the date of expiry.

• Apart from these mandatory inputs, if you are looking forward to calculating the theoretical price of option premium, then you need to put implied volatility as the fifth input.

• Volatility: To calculate the theoretical price of option premium, but the implied volatility price. Volatility Index (VIX) price can be put here as it is a reliable measure of market volatility.