Methodology

This page documents exactly how OptionsGyan produces its numbers, diagrams and examples. We believe in showing our working — so that you can reproduce it, verify it, and trust it.

Example conventions

Reference index. Most examples use a Nifty-style spot of 20,000 and a lot size of 75 for illustration. These are chosen for clarity, not because they are current — lot sizes and levels change over time.
Per-share figures. Payoff figures (premiums, profit, loss) are quoted per share unless stated. To convert to rupees per lot, multiply by the lot size.
Costs excluded. Worked examples and calculators ignore brokerage, STT, exchange fees, GST and taxes, which vary by broker and reduce net returns. Real-world outcomes will differ.
Cash settlement. Indian index options are cash-settled; our examples assume this unless we specifically discuss physically-settled stock options.

Payoff diagrams

Every strategy's profit-and-loss diagram is generated programmatically. For any underlying price at expiry, we compute the value of each leg — for a call, max(spot − strike, 0) − premium; for a put, max(strike − spot, 0) − premium; with the sign reversed for short legs — then sum across all legs. Breakevens are found by detecting where the combined payoff crosses zero, and maximum profit and loss are read from the extremes of the curve. This is the same maths a trader would sketch by hand, executed precisely.

Greek curves

The diagrams on our Option Greeks pages are computed from the Black-Scholes option-pricing model, using a standard-normal distribution and numeric differentiation. Delta, Gamma, Theta, Vega, Rho and the second-order Greeks (Vanna, Charm, Vomma) are each derived from the model and plotted across a range of underlying prices. The curves are therefore original, model-accurate illustrations of each Greek's shape — not stock images. Absolute scales are indicative; the shapes and relationships are the point.

Model assumptions

Black-Scholes assumes, among other things, continuous trading, constant volatility and a lognormal price distribution. Real markets violate these assumptions — volatility changes, gaps occur, and skew exists. We use the model to illustrate concepts, not to price live trades. Treat our Greek values as educational illustrations, not trading quotes.

Calculators

Our calculators run entirely in your browser using the same payoff engine described above. Nothing you enter is sent to a server. The position-sizing and risk-reward tools apply standard formulas: position size = (capital × risk %) ÷ maximum loss per lot; reward-to-risk = maximum profit ÷ maximum loss; expected value = (win probability × max profit) − (loss probability × max loss). You supply the inputs; the tool does the arithmetic.

Data and specifications

Market conventions — lot sizes, tick sizes, expiry days, product availability — are set by the exchanges (NSE, BSE) and revised periodically. Rather than embed numbers that may go stale, we direct you to the exchange for current specifications and use illustrative values in examples. Always confirm live contract specs before trading.

Why this matters

Transparency is an accuracy safeguard. Because our diagrams are generated from the formulas we teach, the visuals cannot contradict the text. Because our examples use open numbers, you can check them in our calculators. And because we state our assumptions, you know the boundaries of what our content does and does not claim.

Educational content only — not investment advice. All figures are illustrative and exclude costs and taxes. See our Risk Disclosure and SEBI Disclaimer.