
# March OptionWorkshop updates v21.3.2294 🌱

Performance optimization, strategy charts improvements, and a lot of behind-the-scenes improvements.

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## Updates

- The **Instruments board** now supports custom sorting. You can drag & drop rows by holding the **Alt** key.
- User-defined strategy chart zooming will be saved when switching between strategies with a bound chart window. The **FitToView** button resets zooming.
- On startup, the OptionWorkshop loads all accounts/trades/positions from the local database. This process was quite slow for databases with a significant number of trades. We’ve optimized it, and now it is 4-5 times faster.
- Pressing the Bind button on the strategy chart window triggers binding instantly.
- The instrument tree is limited to the base asset node in the **position manager** when adding positions through the "+" button.
- Renamed columns in the **position manager**:
  - Position type → P.T.
  - Vola → IV
  - Commission → Comis

## Bug fixes addressed the following issues:

- The toolbar in the volatility chart window was blinking and changing its size.
- Dr.Web detected a virus in **OW.Math.exe** by mistake.
- Update errors when changing the update channel.
- Incorrect location of sliders in the **Price range** on the anchored strategy chart when switching between strategies.
- Incorrect calculation of the price for the total strategy in the **positions manager** table.
- Errors when loading market data from cache for expired instruments.
- Delta hedger didn’t save the center of the hedging range if it (center) was set manually by a user.



# February OptionWorkshop updates ⛄

Charm and Vanna charts, what-if scenarios cloning, caching market data to database, simplifying the program settings at the first launch after installation.

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## Updates

- Showing a dialog for name editing when copying what-if scenarios (instead of adding the default suffix - "copy").
- Added market data caching to a local database. This sets the stage for new functionality, which we are already working on.
- Improved data caching: now, the data is pulled from the market date cache if there is no connection with real-time market data.
- Added notification about trial license expiring.
- Added **Charm** and **Vanna** to strategy parameters charts.
- Improved the experience for first-time users:
  - removed old first-time setup wizard
  - upon the initial launch, the following now displays: a board of instruments with futures and equities, two option desks, a strategy chart, a positions table with randomly generated items
  - all types of connectors are added and preconfigured
- Moved our web-service for math calculations to the client's side. Now, in the list of processes, you’ll also see two processes titled **OptionWorkshop.Math.exe**. This also sets the stage for new functionality.

## Bug fixes

- Error with freezing of the **Price Range** sliders on the strategy chart.
- Authorization error in OW version 21.2.2226.
- Failures of software updates system.
- Error with placing orders in **CQG** as **GTC**. Now, orders are billed as **DAY**.
- Error linking out-of-the-money options to instruments in the CQG system (not everything fixed here, some users are still reporting issues).
- Error adding an icon to the desktop after installing or updating OW.
- Error with a gray background when connecting **IQFeed**.
- Reconnection errors with an expired license.
- Error with rounding off the price range values.



# January OptionWorkshop updates ❄️

Lots of improvements last month! We optimized charts, updated the connectors’ status bar, fixed user bugs, and much more.

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## Updates

- Optimized the volatility curve graph:
  - Removed white border from markers.
  - Filtered spikes.
  - Optimized vertical axis auto-zoom.
- Added a button for invoking the What-If manager to scenario selectors.
  ![A button for invoking the What-If manager](what-if_selector.png)

- Added the ability to use periods and commas in the names of strategies.
  ![Periods and commas in the names of strategies](name_strategy.png)

- Refactored the status bar of the connectors:

  - Different statuses for each connector have been replaced with an aggregating panel with several connectors in a specific group.
  - Connection status, connection settings button, and market data status indicators have been added to the drop-down menu.
  - All connector status icons have been replaced with a circle.
    ![The status bar of the connectors](new_connectors.png)

- Optimized selection of line colors on summary strategies charts:
  - The summary strategy is now always yellow.
  - Colors for lines of individual strategies are automatically selected from a predefined set, adopted for each color scheme.
- The mechanism for adding a position to the position manager has been improved:
  - Added the ability to add positions to any area of ​​the position manager when dragging from the options board.
  - After adding a position, the strategy in which the position was added is activated in the interface.
- Optimized the ease with which strategy charts can be rebuilt:
  - Removed the Apply Changes button.
  - For all changes, the graph is automatically rebuilt using Fit To View.
- The header of the new version notification has been changed.

## Bug fixes

- Fixed an error involving the notification of a new software version if the application runs without restarting.
- Fixed an error with the button for setting custom strikes on the options board.
- Fixed the logic of manually added fills deletion by the Clear Strategy button.
- Fixed an error that prevented the creation of a strategy with the same name as a deleted one.
- Fixed binding errors for new columns in the position table.
- Fixed a bug involving the saving settings in Delta Hedger.



# December OptionWorkshop updates 🎅🎄🎁

Merry Christmas and Happy New Year :)

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![Christmas pic](arseny-togulev.png)

## Updates

- Refactored the way you can select strikes for OptionDesks; now, you can select a custom set of strikes to be displayed on a desk.
- Removed HardwareId copying button.
- Improved telegram bot stability.

## Bug fixes

- Fixed price scaling for Interactive Brokers adapter.
- Fixed an error involving columns order restoration in positions table.
- Fixed bug that prevented receiving market-data from all adapters when a single adapter lost connection.
- Fixed an error that prevented triggering market-data subscription by positions table.



# November OptionWorkshop updates 🍂

We continue to stabilize existing functionality and meticulously, step by step, implement new, useful features with a single aim: to ease the life of options traders. Take a look at what we accomplished in November.

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## New features

- Adapters list now has an edit button in each row.

  ![Transport settings](settings.png)

- When any position in a strategy is modified, the chart's zoom (if any) will be automatically reset to the default state.
- Complicated what-if scenarios, where user can set up IV for particular strikes are now back again.
- Context menu with a list of spreads templates have a new item that invokes the templates manager window.

  ![Templates manager](temp-manager.png)

- Position row context menu now contains the Options desk item that invokes a desk of the corresponding series.
- Positions table has a new column with realized P&L.
- Status bar now contains more information about license.

  ![License link](license1.png)

  ![License settings](license2.png)

- TeamViewer launch button has a blue color.
- To delete a position, the user now has to confirm the operation.

## Bug fixes

- Fixed a set of problems with launching software under some versions of Windows, including Win7 and some server builds.
- Fixed an error that prevented users from opening the commissions setting window.
- Fixed an error that prevented users from opening the log file.
- Fixed an error that was breaking the strategy chart if some specific price range was selected.
- Fixed the logic of P&L (C) and P&L (S) calculation.
- Fixed several problems with manual changing of position price and quantity.
- Fixed several problems with the process of position deletion.



# Online application release

Introducing our new online application – [Online OptionWorkshop](https://optionworkshop.net/app). Please give it a try!

What’s the big idea behind the app? To move into online application all functionality unrelated to:

- real-time market data
- actual positions
- order execution

It includes, but isn’t limited to: options positions modeling, historical data analysis, history of IV curves, ATM IV, spreads IVs, and various scanners.

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Right now, we’ve released the app with a straightforward, user-friendly widget. With this powerful tool, you can create charts that present historical data of underlying instrument price and ATM implied volatility.

Here’s what you’ll see when you first log in:

![](https://ow-blog-static.s3.amazonaws.com/2020/10/online-release/futures-dashboard.png)

[Subscribe](http://eepurl.com/bYqKBz) to our newsletter to receive news about Online OptionWorkshop.



# October OptionWorkshop updates 🎃

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## New features

- Revamped the OptionWorkshop licensing system. Now the license is linked to authorization by login and password. Users will be able to work under the same license on multiple computers without having to request a second license from support.
- Asset-specific what-if scenarios removed. You’ll get them back later, new and shiny.
- Improved the ergonomics of price range control on the chart. There are now buttons that set a range, of a certain width, around the current price of the underlying asset.
- Moved from SQLCE to SQLite database.
- Made it possible to drag and drop an instrument into an empty positions table, without having to create a strategy in advance. “Add New Fill” form dialog will be shown.
- Added current values of the corresponding Greeks to the graph’s activation buttons.

## Bug fixes

- Added an additional logging in critical code parts.
- Fixed a bug that made it impossible to draw strategy charts in certain scenarios.
- Fixed errors in incremental positions parameters evaluation algorithms.
- Fixed a bug that freezes IV charts.


# Option price constituents

Option’s pricing is no walk in the park. Different pricing models are implemented in every piece of options-trading software and used by traders every day. Ninety-nine percent of people take Black-Scholes and other models for granted, using them with no clue about what’s going on under the hood. Well, if they looked, they’d find a bunch of complicated math.

This article graphically shows how the option’s theoretical price is influenced by three main parameters:

1. time to expiration
2. underlying price volatility
3. distance between the option’s strike and the current value of the underlying instrument price

Instead of tying ourselves to any particular options pricing model, let’s just use some common-sense reasoning.

Without losing generality, we’ll consider a call option. All reasoning applicable to put options.

Let’s simulate the underlying price random walks from some point in time up to the option’s expiration date and discuss how these walks affect the call’s price.

## Distance between option’s strike and underlying asset price

Let the initial conditions be as follows:

- underlying instrument price at Day 1 is 50 (some units, doesn’t matter)
- some volatility in the underlying instrument price
- option series time to expiration – 250 trading days (approximately 1 year)
- we observe three out-of-the-money call options with strikes 55, 60, and 65

Now, let’s simulate a reasonable number of underlying instrument price random walks. Each walk starts at Day 1, has a price of 50, and lasts for 250 trading days.

This video shows how generated price walks evolve over time and how some of them reach and cross strikes levels:

<MdxVideo src="https://ow-blog-static.s3.amazonaws.com/2020/10/price+constituents/distance.mp4" />

The 55th strike was crossed 43 times, while the 60th only 35 times and the 65th 21. From the viewpoint of a call option seller, each cross means that the option goes in-the-money and the seller is in hot water.

Because the seller gets in trouble with the 55th strike more often than with the 60th, they’ll sell the 55th call at a higher price than the 60th and 65th calls. Thus, the further the strike stands from the current underlying instrument price, the safer and cheaper an option at this strike is for the seller.

## Time to expiration

To visualize how time to expiration affects an option price, let’s start with the following:

- underlying instrument price at Day 1 is 50
- some fixed underlying instrument price volatility
- two expiration dates, two option series with 125 and 250 trading days till expiration
- a call option with the 60th strike in both series

In the video below, vertical lines denote two expiration dates. The horizontal line is a 60th strike level. Blue lines are the underlying instrument price walks.

<MdxVideo src="https://ow-blog-static.s3.amazonaws.com/2020/10/price+constituents/expirations.mp4" />

Clearly, the strike line was crossed by underlying price walks twice as many times during the whole simulation time range (from the beginning to the second expiration date) than in the first half. From the option seller’s point of view, this means that an option with the later expiration date has more chances to get an in-the-money state than the same strike with sooner expiration. More time to expiration → more risk → greater price.

## Underlying instrument price volatility

The following video contains the same experiment as the first one. The only difference is that we simulate random walks of two underlying instruments, and the volatility of one is twice as big as another. Random walks lines have different colors. Blue lines are for the more volatile instrument.

<MdxVideo src="https://ow-blog-static.s3.amazonaws.com/2020/10/price+constituents/vola.mp4" />

Red marks denote crossings of the strike level by the more volatile instrument. Black marks are for the less volatile. We can see that red marks dominate black ones.

More volatile instrument → greater frequency in reaching the strikes → more expensive options.


# ES 08-12-2020 bullish spread

Opened this beautiful bullish spread today.

- eight days to expiration (08-12-2020)
- max loss ~$850 per spread
- max profit ~$1050 per spread
- good time decay
- many options to close before expiration with profit

![](uXC5NsNBdY.png)

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# Option Workshop, version 19.2.1808

We have released a new version of Option Workshop. The main changes are focused around the FOS (Futures Orders Stairs) feature.

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## Redesigned FOS

We've rewritten it from scratch. Documentation hasn't been updated yet, thus, a brief description of what's been changed is laid out below.

In the previous implementation, FOS only allowed working with generated grid, which was symmetrical around the market price of an underlying instrument. It didn't allow users to change the grid manually.

In the new version:

1. Users can generate a grid using a flexible set of parameters
2. The generated grid can be moved up or down. Thus users are able to adjust it to market
3. Users can change the price value of any node
4. Users can add and remove grid nodes manually
5. For each node on the grid, users can specify an operation with futures, which must be performed when the node is crossed by price upside down or in the opposite direction.

## Performance

Fixed UI performance problem when using custom volatility models and opening volatility skew charts.

## Telegram Bot

Several improvements on stability and data formatting.

## CQG

Fixed a rare case when the software was unable to reconnect after connection loss with CQG backend.

## Teamviewer

Updated embedded Teamviewer to the latest version. This is used for remote support.



# Release fix, 17.4.1457

We’ve released a small update, which includes only two bug-fixes:

- The program sometimes hangs when user try to change position price through the **Set price** button;
- The program ignores the first line of a CSV file with volatility curve.

:::cut:::



# Trump won and you missed the rally. Now what? Part 2 – Gold/Silver (Precious Metals)

In a [previous post](https://optionworkshop.net/blog/post/trump-won-and-you-missed-the-rally-now-what-part-1/),
I wrote briefly about what investors can expect in 2017 as a result of the Trump presidency
and suggested some investment ideas.
In part 2 below, I’m going to delve into the merits of precious metals for 2017.

:::cut:::

Whenever I read a long post, I always wished the writer would put forth the main idea/trade at the beginning. So here it is:

[**Bullish on Gold (GLD)/Silver (SLV) and precious metals miners (GDX)**](https://optionworkshop.net/blog/top-dividend-paying-precious-metal-stocks-these-dividends-could-triple/)

Top picks in gold/silver miners:

**[SSRI, AEM and NG](https://optionworkshop.net/blog/top-dividend-paying-precious-metal-stocks-these-dividends-could-triple/) – use options strategies to capture the preset risk/reward**

Why?

## Risk of trade war with China – adding to stagflation pressures

Trump won the election on the anger of the disenfranchised and now he must provide the resounding solution for them.
In addition to fiscal spending, blame China and take away their "unfair advantage" is another solution.
Having appointed Peter Navarro as director of the newly created White House National Trade Council,
the Donald seems bent on seeing through a confrontation with China – sooner rather than later.

For those who want to know more about Navarro, he’s penned a few books such as "The Coming China Wars"
and "Death by China: Confronting the Dragon – A Global Call to Action."
With a verbose title like that, does anyone think he’s kidding around?

If tariffs are imposed, anywhere near the threatened 45% on Chinese goods, this should cause a few things to happen:

- Lower imports from China while Increasing imports from South Korea, Taiwan and other Asian countries
- Devalue the RMB significantly
- **Increase the cost of imports for Americans**

The devaluation of the RMB may be very severe so perhaps this is why China has been shoring up its gold holdings,
increasing central bank gold reserves by 71.4pc in the past 12 months, compared with a global increase in central bank reserves of 2.8pc.

Hmmm... Lower growth coupled with higher import prices

Here’s a reminder of how Gold performed the last time there was real stagflation in the economy:

![](historical-gold-prices-100-year-chart-2016-12-30-macrotrends-1.png)

## Real rates to remain low

Why would real rates (interest rate net of inflation) remain low if we expect inflation to rise significantly?

![](holmes122816-1.png)

There is around $14 trillion of US debt and this chart shows that if there is an 80bps increase in rates,
then by 2026, the interest alone on this debt will amount to 3.3% of GDP, all other variables unchanged.

Yes this is a very rough estimate but the fact is, the already high debt load will put a cap
on how aggressively the federal reserve can fight inflationary pressures with higher interest rates.
Whether Trump’s policies stimulate growth to the extend anticipated by financial markets remains to be seen.
However, interest rates have already exploded…

![](U.S.-10-Year-Bond-YieldDaily20161230160218.png)

Any disappointments on growth combined with higher interest costs and inflation could well result in more bullish catalysts for gold.

With low real rates, we believe the dollar’s strong advance should be slowed down or even reversed.
And even if the dollar does increase at a measured pace, its impact on gold prices are far from certain.

![](roybyrne122816-3.png)

US $ index rocketed higher in the mid 80’s while gold saw a very muted reaction.
Addtionally, while the dollar traded in a range, gold rose more than 100% from 2008-2012.
The fear of a recession, mass volatility and inflation are bigger drivers of gold than the dollar.

## Equities and bonds are not attractive at current levels

US equity markets have been in a 8 year bull market.
Although up until recently there hasn’t been a real sense of real urgency to the buying,
stocks are very expensive – however one wants to measure it.
David Rosenburg declared back in September that equity markets are discounting a 33% earnings per share growth in 2017, a 1 in 20 event!
And the S&P 500 has rallied another 4% since then.

The expectation is that as risk off days becomes more common in equities and bonds, more investors will allocate funds to gold/commodities.

Of course these three catalysts won’t be the simultaneous focus of investors,
but we suspect these themes to be central in 2017 driving precious metals prices **significantly** higher.

## Got it, but how should I invest in gold?

Buying gold/silver in the ETF market is perhaps the most efficient way to gain basic exposure to these themes.
However, the actual mining companies could also be an excellent choice.
By investing in gold miners, investors may benefit from operating leverage:
as the gold price goes up, the miners’ margins improve, and as many companies have significant debt financing,
the potential returns are often at a faster rate than the rise in gold.

However, this leverage cuts both ways as sometimes when gold falls, even slightly, gold miners can fall multitudes more.

Thus, in the right circumstances, equities could become a better bet than holding the underlying commodity.

As mentioned above, to gain exposure to gold, use GLD and silver, use SLV.
For senior gold miners, [GDX](https://optionworkshop.net/blog/post/top-dividend-paying-precious-metal-stocks-these-dividends-could-triple/)
and for those who want to take a bit more risk,
[GDXJ](https://optionworkshop.net/blog/post/top-dividend-paying-precious-metal-stocks-these-dividends-could-triple/) (the junior gold miners)
would be good choices.

Even more speculative would be holding individual gold miners and our favorites are:

[**SSRI, AEM and NG**](https://optionworkshop.net/blog/post/top-dividend-paying-precious-metal-stocks-these-dividends-could-triple/)

Taking a long term bet on any individual company is very risky so using options strategies
to express your bullish views might be a better approach here.
[**Click here**](https://optionworkshop.net/blog/post/top-dividend-paying-precious-metal-stocks-these-dividends-could-triple/)
to find out exact trades we are looking at.


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