Optactic 2.4.1 is released

In Optactic 2.4.1 user can overwrite the computed cost of the strategy. To find this feature, in the strategy creation screen or strategy details screen, click the “More” text button next to the strategy info panel (where it shows Cost) so that the strategy info will be expanded. At the bottom of the table of information, you will find the “Overwrite Cost” button, right next to the “Reset Cost” button. Click on the “Overwrite Cost” button will show the overwrite dialog box, where you can enter a cost value to overwrite the computed strategy cost. The “Reset Cost” button will reset it back to computed cost.

In most cases you don’t have to overwrite the cost, and I’ll explain why in a moment. There is one case this feature is useful. Sometimes you want to add an existing position, but the only information you have are the options and the price you paid for that strategy. In this situation, there is no way to accurately compute the cost since it requires information about the underlying stock price and volatility at the date of purchasing the options. With the overwrite cost feature, now you can add any strategies you already own from your brokers to Optactic.

You might be tempted to overwrite all strategy cost with the actual purchased cost, but I’d strongly suggest no. The reason is that this will skew the accuracy of calculation. Optactic uses Black-Scholes model to compute the value of options in all its simulation. The Black-Scholes model uses volatility of the underlying stock as one of its input. In order to get consistent result, you should use the same volatility model for all the inputs. For example, using either 90-days standard deviation or a weighted composite implied volatility. The cost you overwrote reflects an implied volatility that includes information of specific supplies and demand of that specific call or put, and it has nothing to do with the overall stock volatility over periods of time.

Hope you will enjoy this feature.