Pie Chart The Pie Chart is essentially a circle divided into sectors. The area of each item reflects its value’s proportion of the sum of all values in one data set. Pie Chart are useful when you need to display the share of each constituent part as compared to the whole volume. Sectors can be […]
Data Science
What is Line Chart and When to Use It
A Line Chart or Line Graph is the most popular type of the data visualization. It displays information as a series of data points called ‘markers’ connected by straight line segments. Usually, a Line Chart shows a dynamics of the displayed value in time (in case of Cartesian Chart) or by X (in case of […]
When to Use Bar Chart, Column Chart, and Area Chart
Bar Chart and Column Chart A Bar Chart or Bar Graph can be only used to compare values. It presents grouped data using rectangular bars whose lengths are proportional to the values that they represent. The bars can be plotted vertically or horizontally. A vertical bar chart is sometimes called a Column Chart. Bar charts […]
Overview of Data Visualization
The Purpose The point of a visualization is to communicate its data in a quick and meaningful way while remaining 100 percent accurate. A visualization should serve a clear purpose and not overwhelm the users with unnecessary details. If possible, a visualization should be designed to encourage the users to compare its various elements so […]
Options Strategy: Create Long Straddle with R Language
The Long Straddle is an options trading strategy that involves going long on a call option and a put option with the same underlying asset, same expiration and same strike price. This strategy tries to gain profits due to volatility in either direction as the strategy wins when the price movement is significant in any […]
Options Strategy: Create Bull Call Spread with R Language
Bull Call Spread is an options trading strategy that involves the purchase of two call options with the same expiration and different strike prices. In the strategy, the trader buys one call option with a lower strike price and sells another call option with a higher strike price. Both calls have the same underlying security. […]
Understanding Options Greeks
In order to have a deep understanding of how option prices are determined, we need to focus on the response of option prices to the factors that determine its price. As we noted above, the price of an European Option is determined by the price of the underlying stock, the exercise or strike price of […]
Binomial Option Pricing Model in R
In the binomial option pricing model, the value of an option at expiration time is represented by the present value of the future payoffs from owning the option. The main principle of the binomial model is that the option price pattern is related to the stock price pattern. In this post, we will learn about […]
Plotting Volatility Smile in R
The main flaw of the Black Scholes model is that it assumes that the volatility of options contracts is constant for different strike prices. This assumption is not reflected in the real world where different strikes prices have different Implied Volatility values showing that investors and traders assign higher premiums for options that allow them […]
Black Scholes Options Pricing Model in R
The Black Scholes model estimates the value of a European call or put option by using the following parameters: S = Stock Price K = Strike Price at Expiration r = Risk-free Interest Rate T = Time to Expiration sig = Volatility of the Underlying asset Using R, we can write a function to compute […]