To calculate the gain or loss on an options contract, take the difference between the strike price and the stock’s price at exit, multiply by 100 (the shares each standard equity contract covers), and then adjust for the premium: subtract it if you bought the option, add it if you sold it. Whether you’re long or short, and whether it’s a call or a put, changes only the direction of the subtraction. The rest is arithmetic.
The Four Numbers You Need First
Before you calculate anything, pull these figures from your brokerage statement or the option chain:
- Strike price — the fixed price at which the contract lets you buy (call) or sell (put) the stock.
- Premium — the price paid or received to enter the trade. Each standard equity option contract covers 100 shares, so a quoted premium of $3.00 is $300 per contract.1Options Clearing Corporation. Equity Options Product Specifications
- Market price of the underlying stock — the current price, or the closing price on the day the contract expires or you close it.
- Your position — long (you bought) or short (you sold).
Your position decides whether the premium is money out or money in. Bought means premium paid; sold means premium collected. Get this wrong and every number that follows is wrong, so confirm it on the statement before you start.
Calculating Gains and Losses on Call Options
Long Call
A long call profits when the stock rises above the strike by more than the premium cost. Three steps:
- Subtract the strike price from the current market price. That’s the intrinsic value per share.
- Multiply by 100.
- Subtract the total premium paid.
Say you bought a $50 call for $3.00 per share ($300 total) and the stock is trading at $58. The math: ($58 − $50) × 100 = $800, minus the $300 premium, equals a $500 gain. If the stock closes at or below $50 at expiration, the call expires worthless and you lose the entire $300. That’s the ceiling on the loss. A long call can never cost you more than what you paid to enter it.
Short Call
Selling a call reverses the perspective. You collected the premium at the start, so you begin in profit and give ground as the stock rises above the strike.
- Start with the premium received.
- Subtract (market price − strike price) × 100. If the stock is at or below the strike, treat that figure as zero.
Same numbers, other side: you sold the $50 call for $300 and the stock hits $58. Result: $300 − [($58 − $50) × 100] = $300 − $800 = a $500 loss. If the stock stays at or below $50, the buyer has no reason to exercise, and you keep the full $300. For an uncovered call seller, the potential loss has no ceiling, because there’s no ceiling on the stock price.
Break-Even on a Call
Break-even for a long call is strike plus premium per share. In the example, $50 + $3 = $53. The stock has to close above $53 for the buyer to profit and for the short seller to start losing.
Calculating Gains and Losses on Put Options
Long Put
A long put profits when the stock falls below the strike by more than the premium cost. The steps mirror the long call, only the direction flips:
- Subtract the market price from the strike price. That’s intrinsic value per share.
- Multiply by 100.
- Subtract the total premium paid.
You bought a $60 put for $4.00 per share ($400 total) and the stock drops to $52. Gain: ($60 − $52) × 100 = $800, minus $400 premium = $400 profit. If the stock closes at or above $60, the put expires worthless and you lose the full $400.
Short Put
Selling a put means collecting the premium and taking on the risk that the stock falls, forcing you to buy shares at the strike.
- Start with the premium received.
- Subtract (strike price − market price) × 100. If the stock is above the strike, treat that figure as zero.
You sold the $60 put for $400 and the stock falls to $52. Result: $400 − [($60 − $52) × 100] = $400 − $800 = a $400 loss. If the stock stays above $60, the full $400 is yours. The worst case for a short put is the stock going to zero, which would cost you the strike times 100 minus the premium received.
Break-Even on a Put
Break-even for a long put is strike minus premium per share. In the example, $60 − $4 = $56. The stock has to close below $56 for the buyer to profit and for the short seller to start losing.
When the Option Is Exercised or Assigned
The formulas above assume you close the position or let it expire. If instead you exercise the option, or get assigned as a seller, the premium doesn’t produce a gain or loss on its own. It folds into the cost basis of the stock.
Exercise a call, and the premium you paid gets added to the strike price to form your cost basis in the shares you now own. A $50 call bought for $3.00 gives you a cost basis of $53 per share.2Internal Revenue Service. Publication 550 – Investment Income and Expenses
Exercise a put to sell stock you own, and the premium you paid reduces your sale proceeds. A $60 put bought for $4.00 gives you an effective sale price of $56 per share.2Internal Revenue Service. Publication 550 – Investment Income and Expenses
Sellers who get assigned run the same logic in reverse. An assigned call seller’s effective sale price is the strike plus the premium received. An assigned put seller’s cost basis in the acquired shares is the strike minus the premium received. These adjustments follow the shares until you eventually sell them, so record them at the time of assignment.
Fees That Reduce the Net Figure
The formulas produce a gross number. Two small regulatory fees apply on sales and reduce the net. The SEC’s Section 31 fee is $20.60 per million dollars of covered sales as of April 2026.3SEC.gov. Section 31 Transaction Fee Rate Advisory for Fiscal Year 2026 FINRA’s Trading Activity Fee is $0.00329 per option contract sold.4FINRA.org. FINRA Fee Adjustment Schedule Both appear as line items on the confirmation. Subtract them from a gain or add them to a loss to get the number you actually took home.
How the Result Gets Taxed
The IRS treats most option gains and losses as capital gains or losses. If you bought the option and later sold or let it expire, the character of the gain or loss follows the underlying property, which for publicly traded stock means capital treatment.5Office of the Law Revision Counsel. 26 USC 1234 – Options to Buy or Sell
Sellers get a different rule. If you wrote the option and it expires or you close it with a buyback, the result is always short-term capital gain or loss, regardless of how long you held the position.5Office of the Law Revision Counsel. 26 USC 1234 – Options to Buy or Sell Holding a written LEAPS for more than a year does not convert the gain to long-term.
Options on broad-based indexes like the S&P 500 (SPX) often qualify as Section 1256 contracts, which get a fixed 60% long-term, 40% short-term split regardless of holding period.6Office of the Law Revision Counsel. 26 USC 1256 – Section 1256 Contracts Marked to Market Standard equity options on individual stocks do not.
Report the totals on Form 8949 and Schedule D.7Internal Revenue Service. Instructions for Form 8949 Errors on those forms can draw an accuracy-related penalty of 20% on any resulting underpayment.8Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments