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Denny's Options Calculators

I'm using Appleworks for my spreadsheets and I have exported them in .xml format (for the Mac challenged).

PUT Calculator

A-Input: Ticker: Stock's ticker symbol
B-Input: Last: Stock's last price
C-Calc: Put ticker symbol
D-Input: Expiration: Put's expiration date	
E-Input: Shares: Number of contracts * 100
F-Input: Price: Mid point between option's bid-ask spread
G-Input: Strike: Put's strike price
H-Calc: Cash: Cash received
I-Calc: Margin: Money at risk
J-Calc: M/C: Margin to cash ratio
K-Calc: Cost: Price of the shares if assigned
L-Calc: Discount: Discount in share price over current price
M-Calc: Diem: Cash income per day
N-Calc: Year: Cash income annualized
O-Calc: Basis: Strike price * Shares
P-Calc: CAGR: CAGR if option expires worthless

I use this spreadsheet to compare the risk/reward ratios of various options by expiration date and strike price. I have a ball-park idea of what works for me which is my starting point: 6 to 12 months to expiration and neat to at the money. In the example I included, LULU closed at 59.78 so I'm using 50, 55 and 60 as the strike price. As you enter each new row you get an idea in which direction you should be seeking.

Once you have entered all the options, sort the list to discard the poor choices (not necessarily in this order):

1- P-CAGR descending: discard anything below your expectations
2- L-Discount descending: this is your safety factor, discard anything below your expectations
3- J-M/C: Margin ascending: This is a measure of liquidity, the lower the number the less cash you have tied up relative to cash (premium) received. I won't touch anything above 500 and prefer really low numbers, 200 or less if possible.

Charting:

K-Cost: For those who like chart reading, compare the cost if assigned vs. the price chart to see where it falls relative to support levels. I like the cost to be near an important support level assuming it shouldn't go lower.

Limits:

In rows 1 and 2 I have set the limits on the amount of risk I want to take on any put position and the maximum number of contracts I want to sell. These control the number of shares (contracts * 100) that I want to deal in. While in shares it might make sense to concentrate, with options diversification is the safer route. 

Diem:

M-Diem: Cash income per day
N-Year: Cash income annualized

I use the annualized per diem calculation to see if the deal is worth doing or not. While diversification in options pays, you don't want to have dozens of tiny, meaningless positions or huge overarching ones either. Suppose you want to get $20,000 annually from your put positions, that could be ten $2,000 positions or twenty $1,000 positions or something in between. I use this as part of my portfolio management kit.







