How a Option Calculator is useful in option trading?
- Is there any importance for option calculator while trading in option?
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we can know the values of option greeks
- It lets you estimate the theoretical fair price of options, you can compare with current market price and see whether the option is overpriced or underpriced.
- It lets you estimate the time erosion and see how much loss you would incur if you hold the option with you (without any change in the underlying)
- It enables you to arrive at a stop loss figure
- It generally outlines the payout graph and let you understand when you will reach the breakeven.
- It provides the option greeks enabling you see how much the option price will change for every unit change in the underlying. (delta)
- Sometimes you get to know the put call parity also, the difference in call and put prices for the same strike price.