Sizing a long option by premium cost
For a single purchased standard 100-share option, the premium outlay is premium per share × 100 × quantity. This worksheet divides an entered account-based budget by that per-contract outlay and rounds down to whole contracts. It is not a short-option margin formula.
Read the inputs before the result
- Enter a positive account value and a premium-loss budget greater than zero and no more than 100%. The defaults are a hypothetical example, not a suggested allocation.
- Choose Manual Premium for an explicit assumed price, or load a sampled chain and choose a contract in Selected Contract Daily Close mode.
- Verify the contract, source timestamp, and standard 100-share deliverable. A daily close may differ from the ask you could pay.
- Review the whole quantity, cost, and budget used. A zero quantity means no whole contract fits; avoid treating it as a prompt to increase risk.
Worked arithmetic
For a hypothetical $50,000 account and 2% premium budget, the budget is $1,000. At $5 per share and 100 shares per contract, each contract costs $500, so two contracts fit before fees. These figures demonstrate the calculation, not an appropriate portfolio allocation.
Limits of the premium-only model
Costs, executable bid/ask prices, existing positions, correlation, liquidity, and broker requirements are not modeled. Exercise can create a stock position with additional exposure or funding needs. Short options, credit spreads, and adjusted contracts need their own maximum-loss and margin analysis.
The optional chain is capped at the first 250 rows sorted by strike. Missing data is unavailable, not a live price. Moneyness describes intrinsic value relative to a separate quote: it does not establish net profit.