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Hi, In the Options Chain area of TOS, there’s a Theo Price function that I would like to reference in a column study to automatically calculate the ratio betwen the Theo Price and the last (or mid of bid/ask) price of the respective options contract. The idea is that I would input theoretical values in the Theo Price tool to populate the Theo Price column values, and the study would use those values to calculate the ratios automatically (Theo Price / Last (or Mid) Price). This would help pick out the options with the best risk-reward ratio for active trading at a glance. Wonder if this is possible? Thanks
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Thinkorswim has a built-in chart study named "TheoreticalOptionPrice": If we examine the code for that built-in chart study we find they are using a function named "OptionPrice()": https://toslc.thinkorswim.com/center/reference/thinkScript/Functions/Option-Related/OptionPrice So we can use that function in your formula and build a custom column for the options chain and this is what it looks like:
Notice this solution uses the mid point between the bid and the ask as the divisor in your formula. Trying to use the last traded price will result in poor and inaccurate results, especially when trading volume for a specific strike price is low.
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 Posted by Pete Hahn (Questions: 37, Answers: 4118) Answered on January 30, 2022 1:05 pm
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