is there a simple way of figuring out if an option is overpriced or underpriced in IB live?
I have heard of the black scholes formula... is there a program that runs side by side with IB that can tell how good of a deal an option is without having to manually calculate the whole formula every price change?
well, with Black sholes. implied versus historical volatility becomes an issue.
you can build what you're talking about in excel, but you will still nead to furnish volatility, which is the most elusive of variables.
However, Black Scholes is really bullshit (yeah yeah, so they go t a nobel prize...) since it assumes linear volatility.
it's an issue.
most options way in or out of the money are overpriced (just look at their implied volatility), but I am not selling them because I just don't have the confidence in the calculation.