How To Select The Best Options From The Graph

How to select the best options from the graph

How to select the best options from the graph

Formulas

Theoretical and Greek Prices

Use this Excel formula for generating theoretical prices for either call or put as well as the option Greeks:

=OTW_BlackScholes(Type, Output, Underlying Price, Exercise Price, Time, Interest Rates, Volatility, Dividend Yield)

Type
c = Call, p = Put, s = Stock
Output
p = theoretical price, d = delta, g = gamma, t = theta, v = vega, r = rho
Underlying Price
The current market price of the stock
Exercise Price
The exercise/strike price of the option
Time
Time to expiration in years e.g.

0.50 = 6 months

Interest Rates
As a percentage e.g. 5% = 0.05
Volatlity
As a percentage e.g.

How to Choose the Best Chart Time-Frame for Trading

25% = 0.25

Dividend Yield
As a percentage e.g. 4% = 0.04

A Sample formula would look like .

Implied Volatility

=OTW_IV(Type, Underlying Price, Exercise Price, Time, Interest Rates, Market Price, Dividend Yield)

Same inputs as above except:

Market Price
The current market last, bid/ask of the option

Example:

Support

If you're having troubles getting the formulas to work, please check out the support page or send me an email.

If you're after an online version of an option calculator then you should visit Option-Price.com

Just to note that much of what I have learnt that made this spreadsheet possible was taken from the highly acclaimed book on financial modeling by Simon Benninga - Financial Modeling - 3rd Edition

If you're an Excel junkie, you'll love this book.

How to select the best options from the graph

There are loads of real world problems that Simon solves using Excel. The book also comes with a disk that contains all the exercises Simon illustrates.

How to select the best options from the graph

You can find a copy of Financial Modeling at Amazon of course.