We know, options are different priced than the underlying. Options have some inherent characteristics which differentiate them from futures and stocks. Options are priced by keeping into account the market risk an investor faces when he takes position. Pricing of options are done according to the famous Black -Scholes formula. Option calculator is a tool popularly used to calculate option greeks for different strike prices.
There are different types of calculators available for calculating options price. Some of them are offline and some are online calculators. Some of these calculators use Black – Scholes option pricing formula, some use Binomial option pricing model, some use the Monte Carlo simulations and some others used variations derived from these. But Black -Scholes option pricing model is very popular as it gives close to real world situation when pricing options. In addition they are more suitable for European types of options which we use in India (that is why we use CE or PE, E denotes European types of options). Also this model has the advantage of fast calculation necessary for live market inputs.
Option calculator using Black – Scholes pricing model is available in two formats. One is used online and the other is used offline to calculate options price and greeks. Traders use these model according to their convenience. Both types of models give similar results as Black -Scholes option pricing model is used for both the models.
Zerodha has an online options calculator that can be found here. We need to give various inputs to get the greeks value. The input variables are Stock price, Strike price, volatility, time (days to expiry), risk free interest rate, dividend. After one puts these variables into the zerodha online option calculator, values of greeks like Delta, Theta, Vega, Rho & Gamma comes out below the calculator.
There are many offline calculators as well. One popular offline calculator is Options Oracle Pasi. Developed for calculating options premium, this calculator also gives you values of Option Pain, Spread, Graphical representation of spread, Break even values and many other useful information.
For more information and usage on option premium calculator kindly visit our how to use page on Nifty Option Calculator.
Partha, an engineer by education, is theoratically actively following the stock and commodity markets since 1990. He is an active trader since 2003. He has received formal education in future and options and quantum analysis. He is presently working on research oriented projects using Python and data analytics.