@spy, it's about the text you recommended. It's a buggy text b/c it's incomplete since the images and formulas in section 3 are missing...
@earth_imperator. - Click bait with the title which you should change as you are wrong and need to get some understanding on options. Black Scholes is more common when teaching options but it uses a log normal distribution which has its flaws. In the real world, binomial or Monte Carlo models are more practical. Cox Ross is binomial which better prices American style options.
BSM is developed with European-style options in mind yes but it can be modified to apply to the American-style options as well by manually changing the time to expiration to reflect an earlier expiration date.
No OP REALLY thinks it's buggy. It's not a clickbait. OP is a Chinese propagandist who is set out to find faults in everything in the western world including our brokerages. LOL
Is the OP trying to make IB compensate him for the "buggy" option calculator? LOL First of all, it's provided as a courtesy and not part of their mandatory obligatory service. IB is a brokerage not an option calculation provider meaning that technically their job is just to get your executed and that's it and everything else that they provide is extra. They even have a disclaimer that states to you that they are not even responsible for the accuracy of their trading software. You use it at your own risk. Now OP is going to become one of those frivolous lawsuit launchers on top of a CCP propagandist. LOL
Log-normal has flaws? Are you saying the others don't use log-normal? It's the fault of IB b/c they did not document it properly, not even in the fineprint. And: IMO their calculator is giving a wrong result, b/c BSM is the correct one and theirs diverges about 1% from BSM...
PROOF WHY THE IB OPTION CALCULATOR IS WRONG AND IS BUGGY: It is said that b/c with American Style options one can exercise anytime (as opposed to the standard European Style where exercise can be done only at expiration), then it has to be more expensive than European Style options. That's their own argumentation! But take a closer look: this buggy calculator even calculates exactly the opposite! Ie. double-buggy IMO! "The correct premium should be 13.892037, not 13.77678." Forget this Cox-Ross-Rubinstein crap pricing method and that IB calculator which uses it! Here's a better calculator based on Black-Scholes-Merton (BSM): http://www.option-price.com/index.php
No wonder the options market makers eat novices like you for lunch. Please stick to your basic B&S and let us know what you'll be trading.