Options Premium Calculator

This calculator prices out a put option strategy, the tool grain marketers use to set a price floor while keeping upside if the market rallies — unlike a futures hedge, which locks in one price both ways. Total premium cost is simply the per-bushel premium times contract size times number of contracts bought, and that premium is the maximum you can lose on the position, paid upfront regardless of what futures do afterward. Floor price is strike price minus premium — the effective minimum you've secured once the premium cost is netted out. The intrinsic value calculation (the amount by which the option is in-the-money) is computed as strike minus futures price, which is specifically the put-option formula: it reflects what the option would be worth if exercised right now, and only applies when futures trade below the strike.

Time value — premium minus intrinsic value — represents everything else priced into the option: time remaining until expiration and implied volatility. As futures price approaches expiration, time value decays toward zero even if futures don't move, which is why an option purchased for hedging needs to be re-evaluated as time passes rather than assumed to hold its premium value. A key assumption to flag: despite the calculator's name covering "puts and calls," the intrinsic-value math here is built for a put; if you're evaluating a call option instead, the in-the-money direction is reversed (call intrinsic value is futures minus strike), so don't apply this floor-price framing to a call position.