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Index Options Calculator

To be effective, a good index options calculator needs to be able to determine two important things:

1. The amount you would receive at expiry date if the option contract expires 'in-the-money' and it is cash settled.

2. The relationship between price movements in the underlying index and the changing value of the options contract. In other words, how much do you win or lose for each one point move in the index?

Finding a good index options calculator is not always an easy task. Just do a search on Google for the term in quotes and you won't find much out there. So in the end, a good options analysis tool should suffice. One of these should provide you at least with a risk graph and profitabilty analysis which can be adjusted on a daily basis, down to expiry date.

Index options only differ from stock options in the way they are settled. If you hold a stock option contract and choose to exercise it, you either buy or sell company shares at an agreed price. But index options are settled in cash, if they are 'in-the-money' at expiry date.

So the bottom line is ... you simply need a good options analysis tool and your index options calculator problems are solved.

Now, the next question is, do you want to pay for such a tool or would you prefer to have access to a free tool that gives you everything you need, to analysis your index option trades?

There are some rather expensive options analysis tools out there, which include market scanning and trading pattern locators, portfolio analysis and other advanced features such as Elliot Wave analysis etc ... often running into price tags up to $5,000. But if you are trading only index options, your trading opportunities are probably more limited, so you would be inclined toward finding a tool that simply calculates your potential profit or loss with an easy to follow interface.

With the above in mind and assuming you want to trade in the US markets, may I suggest you consider opening an account with ThinkorSwim options brokers. You need a minimum $4,000 to start trading with, but once you open an account with them, they provide you a free trading platform that you download from their website. This trading platform is the most advanced in the world. It includes a full featured options analysis tool, which allows you to analyze any options positions you are looking at. These include advanced option strategies such as iron condors and calendar spreads.

At a glance, you can see a risk graph for your proposed index options positions and also scroll through changing price movements in the underlying together with a daily countdown to expiry date, to see the effect these have on your profitability. This makes it a good index options calculator - and in all likelihood will be all you'll ever need.