Options strategy builder (UK)

Build a position in pounds

This builder shows what an options position would be worth at expiry and on any day before it, on the contracts UK investors use: ICE stock options on 1,000 shares (100 on the minis), FTSE 100 options at £10 or £1 a point, and US options converted to pounds. It runs the same engine as the library's worked examples, so figures agree to the penny when inputs agree, except for American puts and calls facing a dividend, which the library prices with a binomial tree, at or a little above the builder's value.

It opens on one BP 550 call from the model sheet. Choose any of 31 presets (the library's 26 strategies in curriculum order, plus a protective put, a put backspread, a put ratio spread, a synthetic long and the big lizard), change the market, or edit up to six legs, and the chart, tiles, Greeks and table follow. The link under the table holds the whole position, and each strategy page links here with its own example loaded.

What the builder is not. It illustrates positions under the inputs shown, takes no live prices, knows nothing about the reader's circumstances and suggests no trades. Margin, tax and the bid-ask spread are outside it; the library's cost conventions are on the methods page.

How to read the three lines

The opening position is one BP 550 call with 60 days to run, from Monday 17 August to Friday 16 October 2026, at 26% IV and a Bank Rate of 3.75%. The model premium is 15.28p a share, £152.81 on a 1,000-share contract, and the £1.40 commission makes the outlay £154.21.

• Solid: expiry. Flat at a loss of £154.21, premium plus commission, below 550p, then £10 for every penny above it, crossing zero at 565.42p; before the commission the breakeven is 565.28p.
• Dotted: today. At 530p it reads −£1.40, the commission; either side it shows what an instant move would do.
• Dashed: the view date. On day 30 with BP unchanged it reads −£69.11 (−£67.71 before costs): half the time has gone, and so has 44% of the premium. An IV shift of −5 points takes it to −£96.21.
• Bands: one and two standard deviations to expiry, 476.97p to 588.92p and 429.25p to 654.39p; the lognormal model puts 68.20% of outcomes inside the inner band.

The tiles give the model probability of finishing with a profit, 25.33% before costs (zero drift, 26%), with the after-cost figure beside it. Delta, 405 share-equivalents or £4.05 a penny, is a different number: delta is not a probability. Theta is −£2.01 a day and vega £8.33 a volatility point. A long call on UK shares adds an SDRT column to the table: exercising buys 1,000 shares, so the holder pays 0.5% of £5,500, which is £27.50.

Worked example: BP shares with a 560 call written against them

Model inputs. BP at 530p (a model level; it closed at 519.6p on 17 August 2026), 1,000 shares bought at 530p, one October 560 call written, 60 days, IV 26%, Bank Rate 3.75%, no dividend before expiry (BP's next ex-dividend date, 12 November 2026, is after it), £1.40 commission and 0.5% SDRT on the shares. BP is a model underlying, not a view on BP. Open this example in the builder.

The call's model premium is 11.97p, or £119.68 on the contract. The largest opening cost is SDRT on the £5,300 share purchase, £26.50, which takes the costs to £27.90.

The chart makes the cap visible. At expiry every price from 560p up gives £391.78, but before expiry the cap arrives slowly: on day 30 at 560p the position shows +£216.79, about half, because the written call still has time value. Delta starts near 660 share-equivalents, not 1,000. The model probability of a profit is 56.51% before costs and of the maximum 28.26%, while BP touching 560p before expiry has a model probability of 58.48%: a price can visit a level and leave it.

On assignment the writer sells the shares at 560p and pays no SDRT; the buyer does. For tax the premium joins the sale proceeds (tax worked examples), and the covered-call page compares strikes.

Worked example: a FTSE 100 iron condor over 45 days

Model inputs. FTSE 100 at 10,750 (a model level; it closed between about 10,600 and 10,900 in August and September 2026), entry on Tuesday 1 September 2026, October expiry on Friday 16 October (45 days), ESX options at £10 a point, dividend yield 3.05% (FTSE Russell, 28 August 2026), Bank Rate 3.75%, £1.70 a contract. Leg IVs from the site's FTSE 100 surface, IV(K) = 14.0% − 0.40 ln(K ÷ 10,750), to two decimal places; probabilities at 14%, the surface's value at 10,750. Open this example in the builder.

The condor buys the 10,150 put, writes the 10,400 put and the 11,100 call, and buys the 11,350 call. The surface gives the puts more volatility (16.30% and 15.32%) than the calls (12.72% and 11.83%); typed into the legs, those IVs reproduce the site's sticky-strike convention, since each strike keeps its own volatility as the index moves. The model premiums are 47.86, 90.74, 69.64 and 21.39 points (rounded); unrounded, they net to a credit of 91.12 points, or £911.22.

Chart, before costs: expiry (solid), day 20 with nothing else changed (dashed) and day 20 with every IV 5 points higher (dotted).

Time and volatility pull opposite ways. After 20 days with the index unchanged the position shows +£331.03 after costs; the same day with IV 5 points higher, −£31.09. Vega at entry, −£86.18 a point, is the largest Greek, and theta, +£12.87 a day, is what the position earns for carrying it. The model probability of a profit is 59.64% before costs, and each short strike has close to an even model probability of being touched (50.90% for 10,400, 50.63% for 11,100). ESX options are European and cash-settled, so there is no early assignment (FTSE 100 options; the iron condor page covers width).

Worked example: a US bull call spread counted in pounds

Model inputs. A $100 US share (illustrative), long the 100 call and short the 110 call, 60 days to 16 October 2026, IV 30% (illustrative), US rate 3.625% (the Federal Reserve range midpoint on 17 August 2026), $0.65 a contract, $1.00 minimum a leg, $1.3559 per £1 (an illustrative ECB reference-rate cross for 17 August 2026). Open this example in the builder.

Model premiums of $5.14 and $1.71 (rounded) give a debit of $342.66 on the unrounded values, or £252.71. Before the $2.00 of opening commission (IBKR's $1.00 minimum applies to each leg of a combination order), the spread makes its most, $657.34 (£484.80), at $110 or above and breaks even at $103.43, with a model probability of 36.78% of finishing above that.

Two things matter more to a UK reader. A broker's quote can replace the model: with a leg set to "My quote", the builder solves that leg's IV, so a quote of $5.30 for the 100 call implies 31.01%. And the pound figures move with the exchange rate when the dollars do not: $657.34 is £505.65 at $1.30 and £469.53 at $1.40. For UK tax each leg converts at the rate on its own date (the FX rule); the US options page covers access and withholding.

Method and limits

• Pricing. Black-Scholes-Merton for every leg at its own IV, with the dividend yield continuous and cash dividends handled by the escrowed-dividend approximation. A typed quote outside the no-arbitrage bounds is refused.
• American options. The lines use European values, so early-exercise value is left out before expiry. The builder warns instead: a written call in the money before an ex-date, with its time value set against the dividend for an options intermediary with SDRT relief and for a private holder, who must also cover 0.5% of the strike; and a written put whose strike interest exceeds its time value (the assignment page).
• Time and volatility. Calendar days divided by 365. The IV shift is parallel; otherwise each strike keeps its own IV as the price moves.
• Mixed expiries. Calendars, diagonals and the poor man's covered call are drawn on the first expiry, with later legs priced by the model, so their maximum and breakevens depend on those legs' IVs.
• Probabilities. Lognormal with one volatility (typed, or the IV of the leg nearest the money), zero drift or risk-neutral. Skew is ignored. They are model outputs, not forecasts, labelled as the methods page describes.
• Costs. Opening commission on every option contract and 0.5% SDRT on UK shares bought; SDRT on exercise or assignment appears in its own table column. Closing commissions, spreads and exercise fees are not deducted. Margin, tax, spread bets and CFDs are not modelled; positions with no upper limit to the loss link to uncovered margin.
• Keyboard and screen readers. Every control is labelled and in Tab order. The chart takes focus, and the arrow, Page Up, Page Down, Home and End keys move a cursor whose values are read out. An invalid entry is explained and pauses the results.

The engine is tested against expected values on every build of the site, and the builder was checked against the same cases.

UK contract conventions in the builder

About 22 large UK names have a 100-share mini and BP is not one of them, so the mini market opens on HSBC (8HC) at 1,530p; whether a broker offers the minis or the 8LX dailies has to be checked. ICE authorises stock-option strikes rather than publishing a fixed ladder, so preset strikes may not all be listed. An adjusted contract goes on the custom market (contract sizes).