Fair Market Value Calculator

Determine the value of an option before you buy or sell

Ever wondered if an option is cheap or expensive? Our Fair Market Value Calculator shows you the fair value of an option based on your price and volatility projection. If you pay too much for an option, you can lose money even if you are right about the direction of the underlying price.

The Fair Value Calculator will help you understand how options are priced, and how changes in the underlying price, volatility, and time affect the price of an option. The Fair Value Calculator is based on a refined Black-Scholes method and models both European and American style options. It works equally well for stock options, futures options, and index options.

The Fair Value Calculator provides a theoretical value of an option based on the current price of the underlying. It uses different modules for determining theoretical value based on the asset (stock, future or index) and the style of option (American or European).

To use this calculator follow these directions:

• Enter the type of asset: Stock, Future or Index.
• Enter the type of Option: American or European.
• Enter the Expiration Date or Days to Expiration to which you are projecting the calculation. Note: These fields are mutually dependent. Enter one and the other automatically updates when you click “Go”.
• Enter the Option Strike Price (or premium).
• Enter the Underlying Price.
• Enter the Volatility you are projecting for the underlying by the Expiration Date.
• Enter the Dividend Yield (the calculator will default to “0.0” if no value is entered).
• Enter the Risk-free Interest Rate (the calculator will default to “6.0” if no value is entered).
• Click "Go".

The calculator will then compute the fair values for the put and call based on the given parameters. To calculate fair value for another option, change any of the parameters and click "Go" again.