FAQ

Assumptions & FAQ

Disclaimer: Not advice or financial advice, it’s a tool. You’re the only one responsible for your own failures. I had to add this.

Assumptions Under the Hood

This tool runs on a plain Black–Scholes model (I know it’s flawed).

That means we assume:

1. Lognormal price paths - Price moves smoothly (no jumps).
   Real markets behave in retarded ways — so real options = more expensive than model values.

2. Constant volatility. σ stays fixed per scenario.
   In real life, IV changes all the time, so we manually simulate crush/spike instead.

3. Continuous trading. You can adjust perfectly any time.
   IRL you can’t, spreads + slippage eat your soul so we ignore it.

4. No transaction costs. Buying/selling costs 0
   In reality, fees and spreads reduce EV, but not by that much unless it’s really OTM low liquidity.

5. No skew or smile. IV is the same for all strikes
   Not true — puts usually pricier (skew). We fake that in event mode via “skew bump”

6. Risk-free rate r and dividend yield q are constant. Simplified yield assumptions.
   Kinda negligeable in reality, but model wants them.

7. No liquidity constraints. You can always fill at fair mid.
   Try that with 1DTE SPY options in real life.

FAQ

• "Why no live data feed & option chain so I just enter the ticker".

  Market data is expensive. Option chain data is even more expensive. Free = you have to do some work. I'm not a fucking charity.

• “Why does EV go up when σ_real > σ_imp?”

  Because the market underpriced the actual movement. Your option becomes worth more since realized volatility was higher than expected. You bought cheap insurance before shit hit the fan, gg.

• “Why does EV stay negative even after a price gap?”

  Because implied vol already priced in a big move. If everyone expected fireworks, you’re the one holding them as they blow up. You need a move bigger than what was priced in to profit.

• “Why do I lose money even if I’m right about direction?”

  -You paid too much IV (σ_imp too high)
  -IV crushed after event (less Vega)
  -You held too long (Theta decay)
  -You’re modeling monkey optimism 🐒

• “What’s the difference between Quick Mode and Event Mode?”
  -Quick Mode: You pick a move (%) + IV change (vol points) and it just shows EV directly — no probabilities.
  -Event Mode: It averages up vs down scenarios with probabilities and includes IV crush and time decay.
  -Use Quick Mode for fast “what if it moves X% and IV changes Y points” tests.
  -Use Event Mode for earnings or CPI-type events.

• “What’s σ_imp and σ_real again?”

  -σ_imp (implied vol): what the market is charging you right now.
  -If σ_real > σ_imp → you’re underpaying for movement (good).
  -If σ_real ≤ σ_imp → you’re donating to the market makers (not good).

• “Why do we use vol points instead of percent change?”
  Because traders talk in vol points, not relative %s. “Up 10 vol pts” means IV goes from 20% → 30%.

• “Why can my ROI look like +2000%?”

  Because the premium is small and you bought lotto tickets. If an option costs $0.25 and you make $5, that’s a 1900% ROI —

  but the absolute gain is still $475 per contract. Don’t get baited by % math; think in dollars.

• “Why does breakeven sometimes say ‘Down’ for calls?”

  Because EV was already positive at 0% move. You can only hit EV=0 by losing money — the “down” move is your loss breakeven. Mathematical loss not real loss. Math is weird. I think I simplified this now: calls show up-breakeven, puts show down-breakeven only (Untested).

• “Why do IV crush and price gaps both matter?”

  -Because sometimes the move helps but the vol collapse kills your gains.

  -Earnings are the classic trap: price jumps, IV nukes, net EV ≈ 0 or negative.

• “Why doesn’t this show Greeks changing dynamically?”

  -To keep it simple and I was lazy to do it.

  -This version uses static vols for each scenario, but the Greeks are there in code if you got too much free time.

• “Is this accurate?”

  -Mathematically: yes (Black–Scholes + your assumptions).

  -Market-reality-wise: no, because volatility surface, order book, spreads, and panic are not modeled.

  -Honestly it’s better as a “when do I fucking take profit” simulator.

• “So what’s this actually useful for?”

  - Deciding if IV is cheap or expensive

  - Testing event scenarios

  - Understanding the effect of IV crush

  - Seeing why most trading options is mathematically retarded

  - Some corpo wanted you to pay 50$/month for the same thing and I like jerking off to corpo tears.

• “What if I want to improve it?”

  -Add:

  -Historical IV data feeds

  -Monte Carlo realized-vol simulation

  -Vol surface fitting

  -Skew-aware repricing

  -Gamma/vega charts

• “Will you release more tools?”
  Smash that Ko-Fi and maybe. I’m very fucking lazy.

• “Will you add strangles, spreads etc?”
  See above, I’m lazy so maybe.

• “Why do the UI and website look like ass and low effort?”
  Lazy.

• “Why make this at all?”
  Bored.

• “Do you accept feedback?”
  I usually ignore it, but there’s a contact form somewhere in here.

• "Why the orange obsession?"

  I like them.