Online Vanilla Option Calculator
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Description
The plain vanilla option is the most traded option.
There are two types of vanilla options, a call option and a put option.
The call options give the owner the right to buy the underlying S for a fixed price K (the strike) at expiration.
The value of the option is thus S-K when the stock is above the strike, and 0 otherwise.
The put options give the owner the right to sellthe underlying for a fixed price. This option has a payoff of K-S
when the underlying end below the strike at expiration, and 0 ontherwise.
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| Payoff functions at expiration of a vanilla call and put option. |
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| Example stock movement and the payoff of a vanilla call option at expiration. |
Relevant Equations
The payoff equation for this option is given by:
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