Work out options hedge cost instantly with clear inputs, formula shown and shareable results.
An option hedge caps downside while leaving upside intact, at the cost of a premium. Pricing an out-of-the-money option shows the trade directly: the further out the strike, the cheaper the premium and the larger the unprotected first loss.
Option hedge premium
Premium from Black-Scholes on a strike set above spot by the chosen distance
Figures are estimates based on the inputs given. Bank charges, regulatory minima and market rates change and differ between institutions and jurisdictions. This is not financial advice — confirm with your bank or treasury policy.
A forward costs nothing upfront but removes upside. The premium buys optionality, which has real value.
Move the strike further out, shorten the tenor, or sell an offsetting option to build a collar.