options-strategy-advisor_skill

Overview

This skill analyzes and simulates options trading strategies using theoretical pricing models and practical risk metrics. It computes Black-Scholes prices, Greeks, strategy P/L at expiration, and offers position sizing and earnings-aware guidance. The focus is educational with actionable outputs and simulation-ready numbers.

How this skill works

Provide a ticker, strategy, strikes, expirations, and position size; the skill fetches price history and dividends or accepts user IV and risk-free rate. It calculates theoretical option prices with Black-Scholes, derives Greeks for each leg, aggregates position Greeks, and simulates P/L across a range of expiration prices. Results include max profit/loss, breakevens, probability heuristics, and an ASCII P/L diagram plus tailored strategy notes.

When to use it

• Analyze or compare common strategies: covered calls, protective puts, spreads, iron condors, straddles/strangles.
• Simulate P/L for a proposed trade to see max loss, max profit, and breakeven points.
• Estimate Greeks to understand directional, vega, theta, and gamma exposure.
• Build earnings-aware plays or assess IV vs historical volatility before earnings.
• Get position sizing guidance and simple risk-management recommendations.

Best practices

• Provide current implied volatility from your broker for more accurate pricing; otherwise the skill uses historical volatility.
• Include dividend yield and correct expiration dates to improve theoretical pricing accuracy.
• Run multiple scenarios (IV up/down, stock move up/down) to understand sensitivity.
• Use position Greeks aggregation to set stop/risk limits and maintain balanced exposure.
• Treat Black-Scholes output as theoretical—adjust for bid/ask, early exercise on American options, and liquidity.

Example use cases

• Simulate a 30‑day bull call spread on MSFT: net debit, breakeven, max profit/loss, and P/L diagram.
• Compare covered call vs protective put on a long stock position to weigh income vs insurance costs.
• Analyze an iron condor for a stock trading in a range and compute probability-to-profit heuristics.
• Evaluate a pre-earnings straddle by comparing IV to historical volatility and sizing risk for a volatility play.