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        INTRODUCTION



The PitBoss Simulator performs several useful functions for stock options traders and investors. In the simplest “calculator” mode,  the PitBoss immediately displays either the call or put option values of the stock when the stock and option strike price along with the expiration date of the option are entered.  In “simulator” mode, the PitBoss permits an easy exploration of a range of input values, all while presenting the corresponding output results.   Thus  'What-if' relationships among option prices and input values are easily generated giving the user an appreciation of the likely consequences of a range of possible market price moves.

The simulatior, for quick calculation,  incorporates default values for both interest rate and volatility.  Or, interest can be easily replace with the current 'risk free' interest rate (typically the short term Treasury Bill rate). Likewise, the volatility can be replaced with one more characteristic of the underlying asset's price or one estimated by PitBoss from real time market values.


WHY A SIMULATOR?

What's an Option 'Simulator' verses a 'Calculator'?   A Calculator generates a single output value from a set of inputs. The name, 'Calculator' also implies a degree of 'correctness'.  However, that does not reflect the uncertainty of stock option calculations, or the real time market dynamics of stock options trading. This Simulator software models varies the input parameters over a range permitting the user to appreciate the theoretically values and general trends of options valuation over the selected range of inputs.


HOW IT WORKS

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The PitBoss iApp selectively generates either the option value or the implied volatility of the underlying stock (whether for Put or Call options). The selector switches for 'Volatility' or 'Value' and for 'Put or Call' are at the top of the display. 

The computed option price and the stock volatility appear below the top selection switches. These edit boxes will either accept input values or provide the calculated output as a function of the option price or volatility selection switch. The remaining updateable edit boxes are used in the calculation of option prices or stock volatility.

A unique feature of PitBoss allows you to calculate the stock option price as if the trading date were some day other than today. 

PitBoss provides 3 methods for easily inputting data values.

(1)   the iPhone keyboard,

(2)   tapping to +/- bump field values, and

(3)    a continuously updated slider control. 

 

INPUTTING INFOMATION

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There are 7 (yellow) data entry fields for which there are 3 ways to enter/change a data field value

    1. iPhone keyboard,

Tapping the 'X' in the data field erases the data field's current value and causes display of the keyboard entry overlay. Tap a numerical key sequence to enter that field's desired data value.  Use backspace to correct miss-taps.   Tapping in the data field (other than on the 'X') opens the keyboard entry overlay,while reserving the current value in the data field for editing.   On exit (tap 'Done') , the currently selected Simulation Mode Output Field is updated.

    2. Up/Down 'Bump' Changes 

Tapping the oval field label adjacent to its data entry field causes display of the Bump+ and Bump- tap buttons.   Tapping either button bumps the current field value by a preset (indicated) amount, up or down respectively.   With each bump, the selected Simulation Mode Output Field is also updated.

    3. Slider Adjustment Changes

Tapping the oval field label adjacent to its data entry field twice in succession causes display of the Slider adjustment tool.   Dragging the slider control to the left or right continuously replaces the field's starting value with that starting value multiplied by the slider adjustment factor, which allows an adjustment range of +/- 20%.    When the slider control is released, the last displayed value becomes the new starting field value, ready for another drag (or tap).   With each adjustment of the data entry field, the selected Simulation Mode Output Field is also updated.


EXPIRATION DATE

The Expiration Date is the last day when the Call or sell Put option can be exercised.  US stock option expiration dates are always and only the third Friday of each month.  Expiration dates thru 2015 are preprogrammed into PitBoss.  NOTE: Select the expiration month by means of the Bump+/-

TODAY's DATE

In reality, Option Value is a 'right now' phenomenon.  However, PitBoss allows the user to simulate the Option Value as if 'now' were some other time (past or future) than the now 'now'.  Select 'Today' as a number of days before or after the real now.  The 'Today' Date is displayed when the 'Expiration Date' is selected, or when the 'Today' Date is some date other than today.  NOTE: Select the 'Today' date by means of the Bump+/- buttons only.


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