Beware! Buggy Options Calculator by Interactive Brokers

Discussion in 'Interactive Brokers' started by earth_imperator, Nov 4, 2022.

  1. #11     Nov 4, 2022
  2. Thx for finding out.

    Cox-Ross-Rubinstein is not the standard, BSM is.
    On the calculator page, IB should inform the users about the underlying option pricing model as well about the days in year their calculator uses, b/c if nothing is specified then one assumes it uses the BSM standard...
     
    #12     Nov 4, 2022
  3. I believe BSM is only for Euro-style
     
    #13     Nov 4, 2022
  4. spy

    spy

    You're welcome, it was a fun question. That said... they show the terms and conditions before you visit the page (and prompt you to agree).

    They also mention the fact that... "The calculations obtained from the Software are based on a mathematical model which incorporates a variety of assumptions, some of which may not be applicable in the markets at the time of the calculation, and resulting prices may be different from actual prices or prices calculated by other mathematical models."

    You read that stuff, right? :sneaky: I don't think they're trying to mislead anyone.

    Finally, when you first visit the calculator, the box for DTE is pre-filled with 365. It's not a stretch to assume they're using 365/yr (even without looking at the source).

    All this makes a decent argument that the big problem is "user error". Then again, I'm a software engineer and of course I'm going to say that. But I greatly empathize with end-users so feel free to disagree! :rolleyes:

    Anyway, engineering is always about making trade-offs and, although helpful, I don't think that little widget is meant to be used for "real trading". BTW, here's an interesting read on the various methods. I don't know that there's a right(tm) one necessarily.

    ¯\_(ツ)_/¯
     
    #14     Nov 4, 2022
    stepandfetchit likes this.
  5. Is it only here so, or are the images with formulas etc. in section 3 missing in the text?
    I just inspected the html, and it seems the images are completely missing, ie. the links are not even present inside the html... :-(
     
    #15     Nov 4, 2022
  6. spy

    spy

    I know... sucks, doesn't it!??! Such a big world, so much to figure out.
     
    #16     Nov 4, 2022
  7. Nope!
     
    #17     Nov 4, 2022
  8. Can you be more specific?
     
    #18     Nov 4, 2022
  9. A lot of stocks have divs... :rolleyes:

     
    #19     Nov 4, 2022
  10. spy

    spy

    no :p
     
    #20     Nov 4, 2022