The Web's Best Free Option Trading Calculators
Option Premium Projections Are Made Easy With the Right Tools
Dec 15, 2008
Proper use and understanding of option ‘Greeks’ can make the difference between profitability or losses for a trader. However, even the best of traders can struggle to use them consistently – there are just too many variables to work with when done by hand. However, there are a handful of effective (and free)option trading calculators to help a trader get a handle on delta, theta, gamma, and vega.
Though certainly not an exhaustive list, below are some of the Internet’s best free option calculators.
This is a light version of Trader-Soft.com’s more advanced ‘for-pay’ calculator. Only one option can be considered at a time with the free version, though this is adequate for the majority of option traders. A download is required, but no permanent installation is needed.
There may not be a better resource for option traders than the Chicago Board of Option Exchange’s website. This utility requires a download and installation, but is well worth it for any option trader. Multiple option trades and advanced strategies can be tested using any if-then scenario.
The software is much more than a calculator; lessons and robust explanations are included with the setup. The software is available by download.
OptionStar's Excel Add-in for Options
This is actually an Excel add-in, so Microsoft's spreadsheet program is required to run it. The user will also need to enable macros to operate the spreadsheet, so caution is advised. Nevertheless, this is a relatively complete tool. The paid version does even more, though the free version is impressive.
The spreadsheet is specifically designed to show its user the profit/loss levels for any possible trade outcome, including multi-legged trades like spreads, straddles, and strangles.
While the process of using these tools may seem cumbersome at times, more often than not it’s worth the effort.
Many traders are surprised to see how weak an option’s delta can be, or how disadvantageous its theta can be. By using these calculators, an option trader can choose the optimal option, select realistic price targets, and take profits at a trade’s likely peak.
Likewise, these tools can also expose how much risk a trader is taking on… risk being unknowingly assumed in many cases. How so? These calculators fully illustrate the results of worst-case scenarios as well as best-case scenarios.
No matter which tool is chosen – if any– an option trader will find this kind of framework simply makes their trades easier to select.
