In the CFA Level 3 curriculum, there are what feels like hundreds of formulas for option strategies. The formulas are all very similar in appearance to each other and would be difficult to memorize. Fortunately, I am able to just work the problems out without memorizing the formulas, by understanding how puts and calls operate and knowing what each strategy entails. Unfortunately, it takes me a bit longer to slog through the option problems this way than I may otherwise have on exam day.
To increase my speed I need to practice hundreds of questions. This sounds easy enough, except that it is difficult to find hundreds of practice questions on these strategies. To alleviate this problem I am just making up my own option problems to work through. To check my answers quickly without looking up formulas, I created a MS Excel workbook which does the heavy lifting for me. You can download a copy of my Excel workbook here: Options Calculator.
The workbook calculates:
- maximum profit
- maximum loss
- the breakeven stock price
- the profit for each strategy
The strategies covered in the workbook are:
- long call
- short call
- long put
- short put
- covered call
- protective put
- call bull spread
- put bull spread
- call bear spread
- put bear spread
- butterfly spread
Each strategy is contained on it’s own worksheet. Cells which are this color are where you would input your data. Do not change information in any other cell color.
Notably missing from the option strategies listed above are the strangle and the iron condor. These weren’t discussed much in the CFA Level 3 curriculum so I didn’t bother with them for now.
The following nomenclature is used for the inputs:
- S0 = current stock price
- ST = stock price at option expiration
- X = option strike price
- c0 = current call option price
- p0 = current put option price
Feel free to use my workbook in whatever way you see fit.