Registering Option Profit Calculator
From the time you first run Option Profit Calculator, you have a 30-day trial period to evaluate it. During that time, Option Profit Calculator will be fully functional. If you decide you like Option Profit Calculator, you should register and pay for it ($25.00). At the end of the trial period, if you do not pay for Option Profit Calculator and input the unlock code you receive, Option Profit Calculator will be deactivated. That is, it will no longer perform the calculations. It will be reactivated when you input the unlock code, which you will receive when you pay for Option Profit Calculator.
There are several ways to pay for Option Profit Calculator. The easiest way to register a single copy is to go to the LeithauserResearch.com site. From there, you can go to the payment page (links are in the third paragraph on the home page). Scroll down the page to the place where Option Profit Calculator is listed. Input the serial number that appears on the registration screen for Option Profit Calculator (the screen that asks you to register and input your unlock code) and then click on the "PayPal buy now" button. You will be sent the unlock code by email. You will normally receive this code within a day, although it may take a little longer under unusual circumstances (Internet problems, etc.).
You can also pay for Option Profit Calculator by clicking on the Print button to print a form. You can then mail this form to the address given on the form or fax it to the fax number given on the form. You can pay by enclosing a check or by filling out the credit card information on the form. You can also pay by phone using your credit card. The number to call is 386-410-6769.
Volume discounts are available. Call 386-410-6769 or send an email to [email protected] with information on how many copies you want to license for a price quote.
What Option Profit Calculator Does
Option Profit Calculator is a software program for Windows computers that helps you compare stock and option transactions. It allows you to input information about the transactions such as purchase and sale (or execution) dates, purchase and sale prices, and so on. It gives you the actual profit from the transaction if the transaction goes as expected and the potential loss in a worst case scenario. More important, it also gives you an annualized profit, both in terms of dollars and in terms of percentages of your investment, and an annualized potential loss. For example, sell an option for $1.00 that expires in two months and allow it to expire. Your profit would be $100 (because one option actually controls 100 shares) minus your commission fees. If your commission fees were $11.00 flat fee plus $2.00 per option, your profit would be $87.00. Your annualized profit on this two-month transaction would be $87.00 X 6 = $522.00. Assume you needed to have $50.00 on hand to cover the option. This $50.00, plus your $13.00 commission fees, are your total investment. Your rate of return would be $522.00/$63.00, or 8.29% annual rate of return.
Because Option Profit Calculator provides profit and loss information in an annualized format, you can easily compare stock or option transactions for various time periods and various investments. How does selling a one-month call compare to a two-month call? How does buying the stock and selling a covered call compare to a naked call? How does the option on a $100 stock compare to the option on a $10 stock? Option Profit Calculator automatically calculates the profit of the transaction, the time duration your money is tied up, and even factors in your commission fees. It gives you very fast calculations of complex problems. It even stores previous calculations and allows you to see them all together for easy comparisons, and it will print the results if you find that more convenient.
Notice: The purpose of Option Profit Calculator is to help you make comparisons between various possible stock and option transactions. It may also prove useful in computing budgeting and tax calculations. However, the accuracy and suitability of Option Profit Calculator for any purpose is to be determined by the end user. Different users may have different ways of looking at what constitutes a profit or loss. Users are encouraged to review the calculation equations presented at the end of this document to determine if they are appropriate for your needs. It is the sole responsibility of the end user to determine if this program is suitable for your needs. Leithauser Research is not responsible for any problems that result from use or misuse of this program.
Setting up Option Profit Calculator
Before you do any calculations with Option Profit Calculator, you should input information on the commission fees that you pay when you make a stock or option transaction. This only needs to be done once, and Option Profit Calculator will remember this data.
To input the information on your commission expenses, click in the Commissions menu at the top of the main Option Profit Calculator screen. This will display a screen that will allow you to input each of your commission charges. These are
1) Stock trade flat fee - The fee that you are charged by your brokerage each time you buy or sell a block of stock. For limited service brokerages, this is usually around $15.00.
2) This is the amount you are charged each time you buy or sell a block of options. For limited service brokerages, this is usually around $11.00.
3) Option Trade Per Option Fee - In addition to a flat fee per option trade, most brokerages also charge you a fee for each option you buy or sell. For limited service brokerages, this is usually around $1.50 per option.
4) Option execution flat rate. This is a flat rate that your brokerage charges you when an option is executed. There is no such fee if the option simply expires without being executed. For limited service brokerages, this is usually around $30.00.
5) Option execution per option fee - This is a fee for each option that is executed. Many limited service brokerages do not charge this fee. If that is the case with your brokerage, simply leave it at 0.
Input the amounts in dollars and cents, or whatever currency you use. Do not include a dollar sign in the text box. Once you have input the values for these fees, click on the Save button. The Commission Information Form will disappear, returning you to the main Option Profit Calculator screen.
The main screen
The main screen of Option Profit Calculator has a frame containing option buttons to select which type of transaction you wish to calculate the return on. You select the type of transaction by clicking on the option button. When you do this, input boxes will appear and disappear on the screen within other frames, to allow you to input only the appropriate information for that type of transaction. Output labels will also appear and disappear within the Results frame, to display the output of the calculation you perform. To perform a calculation, fill in all the visible text boxes and click on the Calculate button or press ENTER on your keyboard. The results will appear within the Results frame.
Some input boxes appears for every transaction, although the labels may change slightly. One of these is the Stock Symbol box. You do not actually have to fill in this box to perform the calculation. However, this text is used to label the transaction in printouts and in the History display (explained later). If you do not input the symbol for the stock, these records will not be labeled and you may have trouble referring to them later. You can leave this box blank if you are sure you will not want to print any of your results or view previous calculations later.
Two other boxes that are used for all calculations are boxes where you input the date the transaction begins and the date the transaction ends. These boxes are in the Dates frame. This information is needed to determine the time length of the transaction, in order to convert it to annualized returns. The beginning is the time a stock or option is bought or sold (in the case of options). The end is the date a stock or option is sold or the date an option expires or is executed. For the first date (the top box in the Dates frame), you need to input a date. This date can be in any reasonable date format, such as "December 20, 2004" or "Dec. 20, 2004" or "12/20/2004" or "12-20-2004". If you input an invalid date or a date in a format that Option Profit Calculator does not recognize, an error message will appear when you click on the Calculate button. You may also input a date manually in the second date box, the one that specifies when the transaction ends. However, for options transactions, a pair of drop down boxes appears within the Dates frame that allows you to select the year and month. If you do this, Option Profit Calculator automatically fills in the third Friday of the month and year you have selected as the option expiration date. In addition, to simplify inputting dates, there is a button labeled Today in the Dates frame. If you click on this button, Option Profit Calculator will fill in today's date in whichever date box currently has the input cursor.
The other input and output for the various transactions are explained below:
Buy/Sell Stock
In this transaction, you simply buy a stock and sell it later, hopefully at a profit. The transaction start date is the date you bought (or plan to buy) the stock. The transaction end date is the date you sold (or might sell) the stock. You must also input the purchase price of the stocks, the sale price, and the number of shares.
The output of this transaction is the dollar profit from the transaction, annualized dollar profit from the transaction and the annualized percent profit. For example, if you bought 100 shares of XYZ stock at $10.00 and sold them a month later for $11.00 and incurred $30.00 in commission fees, your profit would be 100 X ($11 - $10) - $30, which is $70.00. Your annualized profit would be 12 times that (12 months in a year), or $840. Your short-term percent profit would be your profit divided by your expenses. Your expenses would be 100 X $10 + your purchase commission. Say your stock purchase commission is $15. Your expenses would be $1015. Your percent profit would be $70/$1015, or about 6.9%. Your annualized profit would be 6.9% X 12, or 82.8%. OPC also reports the possible loss from this transaction and the annualized possible loss. The possible loss would occur if you bought the stock and it went to $0.00, and would be the amount you that paid for the stock plus commissions.
Sell Covered Call
In this transaction, you buy a stock and sell a call on it. The transaction start date is the date you sell the call. The transaction end date is the date the call expires or is executed. You must also input the stock price at the time the call is sold, the call sale price (what you got for the call), the number of options (calls) you sold, and the strike price for the calls.
Option Profit Calculator will compute the profit from the call sale and the annualized profit on the option in both dollars and percentage. It will also show the profit and annualized profit (or loss) on the stock if the call is executed in both dollars and percentage, as well the total profit and total annualized profit. You can ignore the stock and total profit if the option expires without being executed. The potential loss shown would be the amount you pay for the stock plus commissions minus what you get for the call, and would occur if the stock dropped to $0.00. Option Profit Calculator also shows you the percent of your stock cost that is protected by selling the call.
Sell Naked Call
This calculation assumes that you sell a call without owning the stock, and that it expires without being executed. It requires that you input the date you sell the call and the execution date of the call, as well as the sale price (what you got for each call) and the number of options (calls) you sold. It will output the profit and annualized profit from the sale. Because the amount of money you need to cover the call is so complex, depends on your brokerages requirements, and can change as the stock price fluctuates, Option Profit Calculator does not try to calculate the percentage profit for this transaction. The potential loss is infinite, since the stock could theoretically shoot up to any price overnight.
Buy Call
In this transaction, you buy a call and hope the stock price increases to a point where the call would be executed on the strike date. Option Profit Calculator assumes that you sell the call just before it is actually executed, so you do not incur the expenses of having the call executed and then selling the stock. It further assumes that you sell the call for an amount equal to the stock price on the execution date minus the strike price of the call. If you did allow the call to be executed and then resold the stock, the profits would be very similar. The difference would simply reflect the different commissions you would pay.
This calculation requires that you input the date you buy the call and the date the call would expire, the price you pay for the call, the number of options (calls) you buy, and the strike price of the call. It also requires that you input the price you think the stock will be selling at on the day the call expires. The profits will be based on this estimate. This is unusual for Option Profit Calculator, in that most of the calculations done by Option Profit Calculator involve set amounts, not estimates or guesses.
The output of this calculation is the profit and the annualized profit, both in dollars and percent. It also shows the annualized loss you sustain if the stock is not above the strike price on the execution date.
Sell Put
This is similar to selling the naked call, except that the expense if the put is executed is predictable. That is, with a naked call, your potential expense of covering it is unlimited, because the stock can shoot up an unlimited amount overnight. With a put, the maximum expense of covering the put is the strike price times the number of puts times 100. Your maximum potential loss if the stock totally tanks is this same amount, plus your commissions.
This calculation requires you to input date you sell the put, the expiration date of the put, the put sale price (what you get for the put), the number of options (puts) you sell, and the strike price. It outputs the transaction profit and annualized profit in dollars and percentage, as well as the maximum potential loss if the stock goes to zero.
Buy/Sell Option
This is in principle exactly the same as the buy/sell stock transaction. It assumes that you buy or sell a call or put and then sell it or buy it back before the option is executed. The only differences in the calculation are the commissions, and the fact that for options, you can sell them before you buy them.
This calculation requires you to input the date you buy the option and the day you sell it, the option purchase price, the option sale price, and the number of options you sell. It outputs the transaction profit and annualized profit in dollars and percentage. Because this calculation does not specify which of four possible transactions (buy then sell call, buy then sell put, sell then buy call, sell then buy put) you are doing, it cannot show potential loss.
Printing your results
Once you have the results of a calculation on the screen, you can get a printout of these results by clicking on the Print button or by pressing P while holding down the Alt key. Be sure to turn on the printer first.
History
You can see a summary of the results of the calculations you have performed by clicking on the History button or pressing H while holding down the Alt key. This will pop up a window listing the results. You can scroll down the list with the scroll bar beside the list. You can enlarge or reduce the window buy moving the mouse cursor to an edge of the window until it becomes a two-headed arrow, then holding down the left mouse button and moving the mouse. You can print the contents of the list buy clicking on the Print button or pressing P while holding down the Alt key. You can close this screen by clicking on the Close button, pressing C while holding down the Alt key, or by pressing the Esc key.
Exiting Option Profit Calculator
You can exit (shut down) Option Profit Calculator by either clicking on the Files menu and then clicking on Exit, or by clicking on the X at the top right corner of the main screen.
The Register option
If you have not yet registered Option Profit Calculator, a Register option will appear on the top of the window. Clicking on it will display the registration screen, which also appears when you first run Option Profit Calculator until it is registered. Once you register Option Profit Calculator, this option will disappear from the top of the main screen and the registration screen will no long appear when you first run Option Profit Calculator.
Uninstalling Option Profit Calculator
To uninstall Option Profit Calculator (totally remove it from your computer), click on the Files menu and then on "Uninstall Option Profit Calculator". If you do this, Option Profit Calculator will ask if you really want to do this. If you click on the Yes button, Option Profit Calculator will be totally removed from your computer. You should only use this option if you have decided that you do not want to use Option Profit Calculator ever again.
Bug reports, help requests, suggestions
If you need help with this program, have found a bug, or have a request for additional feature, please contact Leithauser Research. The best way is to send an email to [email protected]. You can also call Leithauser Research at 386-410-6769 .
If you are suggesting an additional feature or other improvement, we will make these changes and release a new version soon if we believe these improvements would have broad appeal. You will be notified when the new version is released. If we feel that the changes you suggest are not commercially viable, we can still create a custom version of Option Profit Calculator for you for a fee. Contact Leithauser Research if you are interested in this.
Calculations
So that you understand the results of the OPC calculations, here are the formulas used to calculate the results. Because there can be various ways of looking at what constitutes a profit or an initial investment, we recommend that you look over these formulates to make sure they reflect the calculation as you understand it.
Buy/Sell Stock calculation
Transaction Profit = (Stock Sale Price - Stock Purchase Price) * Number of Shares - 2 * Stock Trade Commission
Annualized Stock Profit = Transaction Profit / Duration
Annualized Stock Percentage Profit = Annualized Stock Profit / (Stock Purchase Price * Number of Shares + 2 * Stock Trade Commission) * 100
Possible Transaction Loss = Stock Purchase Price * Number of Shares + Stock Trade Commission
Annualized Possible Loss = Possible Transaction Loss / Duration
Sell Covered Call calculation
Stock Transaction Profit = (Stock Strike Price - Stock Purchase Price) * Number of Options * 100 - Stock Trade Commission - Option Execute Commission - Number of Options * Per Option Execute Commission
Annualized Stock Profit = Stock Transaction Profit / Duration
Annualized Stock Percentage profit = Annualized Stock Profit / (Stock Purchase Price * Number of Options * 100 + Stock Trade Commission + Option Execute Commission + Number of Options * Per Option Execute Commission) * 100
Option Transaction Profit = Option Sale Price * Number of Options * 100 - Option Trade Commission - Number of Options * Per Option Trade Commission
Option Profit = Option Transaction Profit / Duration
Annualized Option Percentage Profit = Option Profit / (Option Trade Commission + Number of Options * Per Option Trade Commission) * 100
Total Transaction Profit = Stock Transaction Profit + Option Transaction Profit
Annualized Total Profit = Annualized Stock Profit + Option Profit
Annualized Total Percentage Profit = Annualized Total Profit / (Stock Purchase Price * Number of Options * 100 + Stock Trade Commission + Option Execute Commission + Number of Options * Per Option Execute Commission + Option Trade Commission + Number of Options * Per Option Trade Commission) * 100
Possible Transaction Loss = Stock Purchase Price * Number of Options * 100 + Stock Trade Commission + Option Trade Commission + Number of Options * Per Option Trade Commission - Option Sale Price * Number of Options * 100
Annualized Possible Loss = Possible Transaction Loss / Duration
If Option Strike Price => Stock Purchase Price Then
Call Percent Protection = (Option Price * Number of Options * 100 - Option Trade Commission - Per Option Trade Commission * Number of Options) / (Stock Purchase Price * 100 * Number of Options) * 100
If Option Strike Price < Stock Purchase Price Then
Call Percent Protection = ((Option Price * Number of Options * 100 - Option Trade Commission - Per Option Trade Commission * Number of Options) - (Stock Purchase Price - Option Strike Price) * Number of Options * 100) / (Stock Purchase Price * 100) * 100
Sell Naked Call calculation
Option Transaction Profit = Option Sale Price * Number of Options * 100 - Option Trade Commission - Number of Options * Per Option Trade Commission
Option Profit = Option Transaction Profit / Duration
Buy Call calculation
Option Transaction Profit = (Stock Sale Price - Stock Strike Price - Option Purchase Price) * Number of Options * 100 - Option Trade Commission * 2 - Number of Options * Per Option Trade Commission * 2
Option Profit = Option Transaction Profit / Duration
Annualized Option Percentage Profit = Option Profit / (Option Purchase Price * Number of Options * 100 + Option Trade Commission + Number of Options * Per Option Trade Commission)
Possible Transaction Loss = Option Purchase Price * Number of Options * 100 + Option Trade Commission + Number of Options * Per Option Trade Commission
Annualized Possible Loss = Possible Transaction Loss / Duration
Sell Put calculation
Option Transaction Profit = Option Sale Price * Number of Options * 100 - Option Trade Commission - Number of Options * Per Option Trade Commission
Option Profit = Option Transaction Profit / Duration
Annualized Option Percentage Profit = Option Profit / (Stock Strike Price * Number of Options * 100 + Option Trade Commission + Number of Options * Per Option Trade Commission) * 100
Possible Transaction Loss = Stock Strike Price * Number of Options * 100 + Option Trade Commission + Number of Options * Per Option Trade Commission + Option Execute Commission + Number of Options * Per Option Execute Commission - Number of Options * Option Sale Price * 100
Annualized Possible Loss = Possible Transaction Loss / Duration
Buy/Sell Option calculation
Option Transaction Profit = (Option Sale Price - Option Purchase Price) * Number of Options * 100 - 2 * Option Trade Commission - 2 * Number of Options * Per Option Trade Commission
Option Profit = Option Transaction Profit / Duration
Annualized Option Percentage Profit = Option Profit / (Option Purchase Price * Number of Options * 100 + 2 * Option Trade Commission + 2 * Number of Options * Per Option Trade Commission) * 100