Calculate P&L of options

to calculate the P&L of the buy call option we use
P&L=Intrinsic value - Premium
we use this equation at the expiry

  1. so how to calculate P&L when we exit the trade way before expiry(i.e. holding for a few days)???
    would really appreciate if you explain with an example

  2. also in nifty 50, the largest 50 companies are listed
    how can we get the same list for trading options???

your profit loss is based on your entry and exit. just deduct your sell price from buy price and you’ll get your profit/loss.

for eg.

if you buy option for 100rs and sell it for 120 then 20rs is profit per lot!

if you buy option for 100rs and sell it for 90rs then 10rs is loss per lot!

you’re asking really basic questions, it seems you’re new to trading in Future/options.

go through

and you’ll get all the info with examples. It’s free.

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It is simple.

Eg. You bought an Option at Rs. 50 and sold at Rs. 60 so the difference between your buy price and sell price is your profit.

Similarly when you short a Option, say at Rs. 50 and buy at Rs. 40, the difference between your Sell price and Buy price will be the loss you will be making.

PS: This difference you will have to multiply by Lot Size, each scrip has different lot size, for example Nifty’s lot size is 75 while Bank Nifty’s lot size is 25.

Similarly for stock options, lot size varies from stock to stock.

Easier way to calculate P/L is by using Brokerage Calculator.

There is no such list for Options but if you want to view most traded Options, you can do so here.

Would suggest you to go through the following module on Varsity, you will get to learn more about Options there.

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yeah I am new to F&O
so if i exit trade before expiry i am actually trading premium
but what happens on expiry day, if i was long on call option then i get the right to buy the share. so shares will be alloted on my demat account???

If you’re trading in stock options then physical delivery happens if options are expiring ITM (In the money) it’s all based on moneyness. For Index options, there’s no delivery it’s settled in cash.

please go through the varsity link posted above to learn more. do not directly jump into it or you’ll face huge losses.

for eg. almost all contracts for stocks are of around 15Lacs so if you get into physical settlement you’ll need more than 15 Lacs for the settlement. This is to warn you what might happen not to scare you. I encourage you to learn from basics and start learning with index options with single lot to get the real experience once you’ve learned from reading/watching videos.

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correct me if I am wrong, consider long call for Reliance
strike=2380 (OTM option)

  1. after a few days,
    strike=2380 (it became ATM)
    since the underlying has increased the premium will also increase for a call option
    therefore Premium @ strike2380 will be 42
    therefore if now I exit this trade my P&L will be
    P&L = 42-16 =26 * lot size
    I hope i am correct till here

  2. but if I wait till expiry
    on expiry day
    strike=2380 (it became ITM, lucky me :star_struck:)

now the premium is expensive in ITM
therefore premium for strike @2380 will be 90

a. if i dont exercise the right to buy the share then my P&L will be
P&L = 90-16 =74 * lot size …am i correct over here???


b. if I exercise the right to buy the share then P&L will be
P&L = IV - Premium Paid
=(spot - strike) - 16
=(2440-2380) - 16
=44 * Lot size, —>this is the profit if I exercise the right to buy the share, so now what will happen to shares ??? will it be in my Demat account??? also do I have to buy 1 lot shares???

would really really appreciate your response :pray:



The shares will be delivered to your Demat account in T+2 days, and yes you will have to take delivery of 1 lot of shares.

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Thank you soo much @ShubhS9 :kissing_heart: :heart: :raised_hands: for your response
I know these questions might seem silly but I am new to trading and full of hunger to grab the knowledge of the stock market.

No problem :slightly_smiling_face:

Suggest you read through Varsity, you will certainly learn a lot more about every topic related to the market.

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