How Much Is My Option Worth

A real simple way of doing this is by look at the “Option Chain” for your stock. Let’s look at the Option Chain for AAPL – Apple, Inc. we see that the option strike are at $5 increments, so if AAPL go up or down $5, your option price will be reflective of the next strike level.

Example 1: AAPL Jun 560p @ $8.80, if the stock goes down to $555 per share, which would make the option $5 in the money the option will be at least $11.25 per contract. AAPL Jun 560p @ $8.80 – $11.25 = $2.45 per contract profit. If the stock goes to $565 per share, which would make the option $5 out of the money the option will be at least $6.85 per contract. AAPL Jun 560p @ 8.80 – $6.85 = $1.95 per contract loss. What happens on the days the stock does not hit those increments. The Delta will tell you the exactly the amount the option is worth. An option’s delta will help fill in the gaps on those days that the option does not range it’s strike increments, quite simply, the Delta is the representation of the dollar value change of the option with each underlying stock move up or down $1.00.

 

Calculation for Delta is the Delta times Point Change plus or minus the Last Option Price. Ex. AAPL Jun 560 has a Delta of .47. If the underlying stock was to go up $1.00 the option would be now worth $9.27 per contract gain or $8.33 per contract loss if the underlying stock was to go down $1.00. If the underlying stock was to go up $.50 then you would half the Delta for your contract worth.

Look at the Option Chain on your stock to get the $ increments.

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