I'm totally new to the world of options and I know I should start with the basics. I'll do paper trading at first and only then move on to live trades. Just wanted to know if these "calculators" are reliable and do they give an accurate assessment of the risk involved.
Posted by Key_Machine_4671
5 Comments
It’s just a #math calculation OP
‘totally new to the world of options and should start with the basics’ but you link to a bizarre 3-leg non-standard construct. Why not start with the basics?
Paper trading is pointless. You’re better to learn with small amounts. 0 skin the game will never develop a stomach for bigger trades later. Waste of time, may as well play GTA or a game that is actually fun
They’re fine but you should really use the volatility slider to see what could happen if volatility changes. Otherwise all their calculations are defaulting to the current volatility.
They give as accurate assessment of Greek risks as will ever make a difference for retail accounts. Using them wisely in real trading requires a lot of knowledge , e.g. they are instantaneous assessment, IV can change wildly, how they change with changes of each other (how IV changes theta) etc.. etc…. And they are all of smaller importance than other aspects of successful trading (e.g. how to hedge, money management, diversity, size etc.. etc.. Happy trading journey…
It’s not accurate because it can’t account for change in IV. You could simulate the effect as IV changes and then the calculation will be accurate. But you won’t know how to do it if you’re asking this because if you did know how to model IV changes you wouldn’t be asking here or using a calculator. No offense.