OptionsSimulator for Research & Education
A forward-looking options market simulator built on the same stochastic models used in quantitative finance — for teaching derivatives, running bias-free trading experiments, and generating synthetic market data.
OptionsSimulator generates complete options markets that have never existed. Instead of replaying historical price series — which students and subjects can unconsciously read backwards — it simulates forward paths from well-specified stochastic processes, prices the full option chain against them in real time, and lets a trader act without knowing what happens next.
The result is a controlled, reproducible environment for studying decision-making under genuine uncertainty: no survivorship bias, no hindsight bias, no leaked ending. Every scenario is mathematically real and, crucially, unknown to the participant.
The underlying mathematics
Price paths are generated from seven stochastic models spanning the standard curriculum of computational and mathematical finance:
- Geometric Brownian Motion — the Black–Scholes framework (Black & Scholes, 1973).
- Merton Jump-Diffusion — Poisson jumps for crashes and news shocks (Merton, 1976).
- Heston — stochastic volatility with mean reversion (Heston, 1993).
- Bates — Heston dynamics plus jumps (Bates, 1996).
- SABR — stochastic-alpha-beta-rho volatility-smile modelling (Hagan et al., 2002).
- GARCH — volatility clustering (Bollerslev, 1986).
- Fractional Brownian Motion — long-memory / persistent dynamics via the Hurst exponent.
Options are priced with a Cox–Ross–Rubinstein binomial tree (1979), the Bjerksund–Stensland (2002) analytical American approximation, and Black–Scholes for European contracts. A vectorised Monte Carlo engine adds Longstaff–Schwartz American pricing, 95% confidence intervals, full Greeks (Delta, Gamma, Theta, Vega, Rho), and portfolio risk analytics (VaR / CVaR, probability of profit, P/L distributions).
Use in the classroom
Instructors use OptionsSimulator to make derivatives tangible without the cost and delay of live markets:
- Show how a Call, Put, or spread behaves as it approaches expiration — in minutes, not weeks.
- Let students feel the Greeks change across trending, ranging, calm, and volatile regimes.
- Stress-test income strategies (Iron Condor, Covered Call, Cash-Secured Put) through a volatility spike.
- Assign reproducible lab exercises: every model is seedable, so a cohort can trade the same generated market.
Use in research
For empirical and behavioural work, the simulator is a source of controlled market data and a platform for experiments:
- Synthetic data generation — produce OHLC series and option chains with known, tunable dynamics for model-testing where real data is scarce, noisy, or confounded.
- Behavioural finance — study cognitive biases (hindsight, disposition effect, overconfidence) in a setting where the future is provably unknown to the subject.
- Strategy evaluation — compare strategies under matched, repeatable market conditions instead of a single realised history.
Why forward simulation, not backtesting
Backtesting reports what a strategy would have done on a past series — but the past is readable, and both students and research subjects read it backwards even when they believe they do not. Strategies that look profitable in-sample fail live because the test already knew the ending.
Forward simulation removes that confound. Each path is drawn from a specified process and revealed one step at a time, so participants face the same information structure a live account imposes. That property is what makes the tool useful for pedagogy and for clean experimental design alike.
Access for academics
The simulator runs in any browser with no signup required to start, and no real money is ever involved — it is an educational tool, not a brokerage. For classroom cohorts, course integration, or research use, get in touch and we will arrange appropriate access.
Contact us about classroom or research access → · Read our research & education articles →
Who builds it
OptionsSimulator is built by Thetix Technologies Ltd (London, UK). It is an educational simulator; nothing on the platform is investment advice, and simulated performance does not represent real trading results.