Options Calculator

Upcoming Improvements – Covered Call and Short Positions

I have found several new bugs in the graphical output of the “probability box”. These will be fixed shortly. At this very moment I am working on several new improvements in the calculator. I want to add several new features that will make this tool even more handy and powerful.

First of all I need short positions. In many cases (and those of you who do have some trading experience with options will agree) going long with options is to your disadvantage. You have certainly heard that over 80% of all options expire worthless without ever being executed. The reason for this is, that once you understand the probabilities, you can write (go short) with options that look profitable for the buyer, but never get into-the-money. People who write options usually understand the statistics and probabilities pretty well. It takes a pretty dumb and careless trader to write options (maybe even naked ones?) blindly without checking carefully one’s chances.

Anyway, I don’t want to convert this into a rant about dumb trading strategies. I might continue this in another post sometime.

What I was trying to say is this: going short in options is statistically more profitable than going long, because people who go short usually understand options better.

Therefore I decided to add this new feature to the calculator. Instead of going in and out of long positions, I also decided that it would be handy if you could simulate short (and mixed) positions as well.

Secondly I want to add trades of the underlying (short and long) to the simulation. For many option strategies out there you need the underlying in your positions.

So with these new features you will be able to simulate a whole new range of other option strategies. (E.g locking a covered calls in C/R)