Inspiration
We are interested in the stock market and options and we thought this tool could be a good way to find many of the values that are vital to buying and selling options.
What it does
Prices are calculated using the Merton-Black-Scholes method of options pricing theory, which uses the underlying price of the stock, the strike price of the option, the volatility of the stock, the continuously compounding risk free interest rate (which is derived from the interest rates of U.S. treasury bills), the continuously compounding dividend yield (which is derived from the stock’s dividends from the previous year, when applicable), and the time until expiration
How we built it
We used java and an assortment of finance APIs.
Challenges we ran into
Perhaps the largest roadblock faced by the group was a lack of calculus and statistical knowledge. We struggled to understand the calculus-based Merton-Black-Scholes model, which, in addition to being new to us, included statistical terms and equations which we did not know how to use. This confusion was expounded by the difficulty faced in converting the calculus and statistics into equations in Java. Thus, a large portion of our time was spent trying to decipher these equations and format them to fit our java program.
Accomplishments that we're proud of
We eventually were able to successfully implement many of the equations that we were struggling to understand including the Merton-Black-Scholes model.
What we learned
Financial equations, stats
What's next for Options Calculator
expand on the graph functions more expiration date choices ability to compare with the binomial options pricing model (we were currently unable to do this because of the calculus involved) add puts
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