Which pricing algorithms are used?

Option pricing on Optionistics uses the Black-Scholes / Merton model with a continuous dividend yield adjustment.

Implied volatility is computed numerically by inverting the same model: we iterate volatility until the model price matches the observed market price to within 1bp. Greeks (delta, gamma, vega, theta, rho) are analytical first-order derivatives of the same formula.

Limitations:

• Black-Scholes assumes geometric Brownian motion and does not account for skew, kurtosis, or jumps.
• The model is a closed-form European pricer; American optionality (especially on dividend-paying stocks near ex-date) is approximated.

If you need a different model, the Probability Calculator also offers a Monte Carlo simulation mode.