How to analyze selected underlying stocks.
How to Start
Welcome to PowerAnalyzer, the smart way to carefully assess your potential investments.
Open Browser and go to PowerAnalyzer
Log In page. After you pass the security check, it will take 1-2 minutes,
depending on your connection to the Internet, for the applet to load into
your computer. If you are working from your own computer and it is
not your first time accessing PowerAnalyzer, it is likely that your Browser
has already cached the applet and the loading process will be quicker.
When the loading process is completed you will see
the following picture;
A small Help ("PowerAnalyzer Help") in the right bottom
corner tells you what to do. We’ll use Spyglass (SPYG) as our example stock:
As you can see, the closing price for SPYG (Spyglass,
Inc.) on Monday April 24, 2000 was $40.50 and all options, available for
"SPYG", are shown in the Option Matrix.
Navigate through the option strikes by using scroll bar
to the right of the Option Matrix. All columns in Option Matrix are self-explanatory
except for the last column. The column on the far right is
currently set to tell you the Fair Value of the option, however, if you
click on the arrow by the "Fair Value" header, you can customize this column
to show "Implied Volatility, Delta, Theta,Vega, Gama, Volume or Ticker
Symbol.
Sometimes the calculation of Fair Value and Greeks are
different from the results you might review in other services. To clarify
this and to avoid any confusion, it is necessary to define the Power Analyzer
approach.
The main parameter in the calculation of Fair Value, Delta
and other Greeks is which Volatility is being used. PowerAnalyzer utilizes the "20 Days Statistical Volatility".
If other services use a different volatility ("1 Day Implied
Volatility"), then the results will be different. Our professional opinion
is there no reason to use "1 Day Implied Volatility" in the calculation of
Fair Value, because by definition "1 Day Implied Volatility" will give you
the same option price. We use the "20 Day Statistical Volatility", which
better represents Fair Value. Some traders use "90 Days Statistical Volatility"
but that is using a long historical trend, which sometimes presents an
incorrect picture in such a volatile market.
Also, to the right of Option Matrix is PowerAnalyzer "Power
Analyzer Help" screen. Scroll through it and you will see descriptions
of available Features, step-by-step instructions on how to create and analyze
option strategies, including special instructions for Covered Call strategies.
It also has a description of the result fields that appear when you
"Compute" your strategy, such as Price/Profit/Probability Table, Expected
Profit/Loss (Exp. P/L), Sum of Delta and Probability of Success.
This information is valuable in your analysis process.
