What is an Option Strategy Builder

Friends, as we move forward in the journey of trading, we get to learn new things every day and when it comes to option trading, It becomes very crucial that we have good information as well as we should know about modern tools on the basis of which we can earn a good profit, because option trading is very risky and only our good knowledge and well-thought strategies can make us profit, otherwise, there are many people who trade without any proper planning just like gambling and lost their everything in it, while there are also a lot of traders who earn decent money, because of their knowledge and proper strategy,

Professional traders always know when to buy stocks and at what price?
They estimated the market condition more accurately than a normal person also calculate the risk percentage and probability of loss and profit, they build up a strategy according to the market condition, and that's the reason why most of the time they are in good profit.

Trading especially option trading is the field where the loss is limited but profit is too high you get 500c/o or even more returns just in minutes all that you needed is just a good strategy, Now if you are wondering 'from where you could learn all these things and how can you make good strategies like a professional trader?' then don't worry, that's why we are here to help you. In this article, we have mentioned options trading strategies and discussed how you can create an options trading strategy using an excel sheet. So, let's start with understanding,

What is an option strategy builder & why do we need this?

Whenever we trade we have two strategies according to the market if the market seems to be bullish, then we have to design a bullish strategy, a different strategy for the bearish market and similarly for the volatile and straightforward market, There is also a need to calculate when to buy a stock at what price and how much profit or loss we may bear after selling them, all this work is very time consuming and mind-boggling and requires a lot of effort,
This is why professional traders use options strategy builders, and creating an options strategy using an excel sheet is one of the better ways to trade.

And that's the reason why we need this, now if you also want to build up an option strategy by using an excel sheet then read this post till the end.

Here we have mentioned how by using the profit-loss diagram also known as payoff diagram, you can predict what happens with the option strategies if in the case the value of underlying asset changes.

What is the Payoff diagram?

It is a graphical representation of the performance of a particular option strategy at different closing prices. Allowing a trader to gain an understanding of the possible outcomes. And also help us to understand the risk and return of a particular options strategy,

  • Y-axis of the diagram(vertical axis) - denotes profit or loss generated by a certain strategy at expiration, Whereas the,
  • X-axis( horizontal axis) - shows the price of the underlying asset on the day of option expiration.

How to use the option strategy payoff calculator?

  • Step-1: Download the excel sheet of Options Strategy Payoff Calculator by simply typing' free Options Strategy Payoff Calculator excel sheet download ' and download it from any authentic website.
  • Step-2: Open that excel sheet and choose your option type, and then fill up the quantity, spot price, strike price and premium. and remember to always put a negative sign before quantity, if you are shorting any option.
  • Step-3: After that, you have to fill up the no. of legs your strategy contains and set the number of remaining legs to 0. For example, if you want to analyze the payoff of only a 3-leg strategy enter the values in only the first 3-legs and set the rest legs quantity to 0.
  • Step-4: If you have a strategy in which you buy or sell a stock or futures such as a covered call or protective put then you have to enter its volume, future price and spot price in leg 5 and if you don't have any of such plans set the quantity to 0. And when you do that you get the payoff diagram, maximum profit or loss potential and net premium flow for your strategy.
  • Step-5:- Also if you wish to know how much profit or loss you get for a particular expiry price, fill it and you will get profit as well as loss value if your underlying expires at that price.

That's it, Although there are many things you could do by using an option strategy excel
but it is difficult to cover them all in a single article. so read our other posts to learn and
understand about trading and much more.

In this post, we have mentioned that it is very risky to trade without proper knowledge and a good strategy anyone can be at a big loss, if, he/she don know
how to build up a strategy, and we also mentioned how anyone could build up an option strategy easily by using an excel sheet also we discussed what is a payoff (profit and loss) diagram and table and how to read it along with its importance and mentioned the steps through which you can build up your strategy easily and find out the suitable results according to your predicted values.

I hope this post of ours will be proven beneficial for you


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