Minutes 0–4: label the inputs

Write this fictional instruction: buy three ABC equity call contracts, with a $50 strike, an expiration four weeks away, and a premium of $1.80 per share. For this example, the contract multiplier is 100. The Options Industry Council explains that equity options usually represent 100 shares, while adjustments can change contract specifications.

Keep the premium and strike in different boxes. The premium is the price used to acquire the option; the strike is part of the contract's exercise terms. Add a fictional fee of $0.65 per contract per transaction. This worksheet assumes a later sale to close before expiration and does not model exercise or a resulting stock position.

Minutes 4–10: reconstruct the purchase

Calculate one contract's premium amount: $1.80 multiplied by 100 equals $180. For three contracts, $180 multiplied by three equals $540. Next calculate the opening fees: three multiplied by $0.65 equals $1.95. The fictional purchase therefore uses $541.95, consisting of $540 in premium and $1.95 in fees.

Read the calculation aloud with its units: dollars per share, multiplied by shares represented per contract, multiplied by contracts. This prevents a common worksheet error: multiplying by the quantity while forgetting the contract multiplier. Check that you used the premium rather than multiplying the $50 strike into the purchase cost.

Draw two separate rows for premium and fees instead of compressing everything into one total. If your answer differs from $541.95, the separate rows tell you whether the disagreement comes from the multiplier, quantity, fee assumption, or arithmetic.

Minutes 10–18: reconstruct the closing sale

Now suppose the exercise records a closing sale of all three contracts at $1.55 per share. This is an assumed simulated fill, not a claim that a screen quote would guarantee that price. Gross closing proceeds are $1.55 multiplied by 100 multiplied by three, or $465.

The same fictional fee schedule adds $1.95 in closing fees. Subtracting those fees leaves $463.05 in net proceeds. Compare that amount with the original $541.95 outlay: $463.05 minus $541.95 equals a loss of $78.90.

Reconcile the result a second way. The premium declined by $0.25 per share. Multiplying $0.25 by 100 and then by three gives a $75 premium loss. Total opening and closing fees are $3.90. Together, they produce the same $78.90 loss. Two matching calculation routes make the arithmetic easier to inspect.

Minutes 18–24: change one assumption

Copy the worksheet and change only the assumed closing fill to $1.50. Gross closing proceeds become $450, net proceeds become $448.05, and the total loss becomes $93.90. The five-cent change in the assumed fill changes the result by $15 because the exercise covers three contracts with a 100-share multiplier.

Leave the original worksheet intact. Label the new one “alternative fill assumption.” You are examining sensitivity to one input; you have not discovered which fill would occur in real trading. If you later use an actual simulator, record how it produces fills and what relevant data it does not provide.

This is also a good point to check scope. The exercise assumes all contracts close at one stated price and the same fee applies on both sides. Different quantities, partial fills, contract terms, or cost schedules require their own calculations. Do not silently carry these fictional assumptions into another example.

Minutes 24–30: explain and check your work

Cover the arithmetic and explain the original example in three sentences: “Three contracts required $540 in premium. Opening and closing fees totalled $3.90. Selling at the assumed $1.55 price produced a $75 premium loss and a $78.90 total loss.” Then uncover the worksheet and check every number.

Finish with one unresolved question, such as how to locate a contract's actual multiplier or how your chosen simulator treats a closing order. Your completed task is a reconciled receipt and an explanation of its assumptions. That is a useful learning result even though no trading decision or performance claim follows from it.