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calculate_implied_volatility

Calculate implied volatility from option price data using the Black-Scholes model. Input symbol, expiry, strike, option price, and underlying price to derive market-implied volatility for options trading analysis.

Instructions

Calculate implied volatility from option price.

Input Schema

TableJSON Schema
NameRequiredDescriptionDefault
symbolYes
expiryYes
strikeYes
rightYes
option_priceYes
underlying_priceYes

Implementation Reference

  • src/ib_async_mcp/server.py:730-744 (handler)
    The handler logic for 'calculate_implied_volatility', which qualifies the contract and calls 'ib.calculateImpliedVolatilityAsync'.
    if name == "calculate_implied_volatility":
    contract = Option(
        args["symbol"],
        args["expiry"],
        args["strike"],
        args["right"],
        "SMART",
    )
    await ib.qualifyContractsAsync(contract)
    result = await ib.calculateImpliedVolatilityAsync(
        contract,
        args["option_price"],
        args["underlying_price"],
    )
    return serialize_object(result)
  • src/ib_async_mcp/server.py:340-354 (schema)
    The MCP tool registration and input schema definition for 'calculate_implied_volatility'.
    Tool(
    name="calculate_implied_volatility",
    description="Calculate implied volatility from option price.",
    inputSchema={
        "type": "object",
        "properties": {
            "symbol": {"type": "string"},
            "expiry": {"type": "string"},
            "strike": {"type": "number"},
            "right": {"type": "string"},
            "option_price": {"type": "number"},
            "underlying_price": {"type": "number"},
        },
        "required": ["symbol", "expiry", "strike", "right", "option_price", "underlying_price"],
    },

Tool Definition Quality

C2.4/5.0
Behavior2/5

Does the description disclose side effects, auth requirements, rate limits, or destructive behavior?

With no annotations provided, the description carries full behavioral disclosure burden yet reveals no details about calculation methodology, convergence behavior, error conditions, or performance characteristics. It fails to disclose whether this performs a mathematical solve or data retrieval.

Agents need to know what a tool does to the world before calling it. Descriptions should go beyond structured annotations to explain consequences.

Conciseness3/5

Is the description appropriately sized, front-loaded, and free of redundancy?

The single sentence is structurally efficient and front-loaded with the action verb, but extreme brevity constitutes under-specification rather than effective conciseness given the tool's complexity. The description sacrifices necessary parameter documentation for brevity.

Shorter descriptions cost fewer tokens and are easier for agents to parse. Every sentence should earn its place.

Completeness2/5

Given the tool's complexity, does the description cover enough for an agent to succeed on first attempt?

For a complex financial calculation with six undocumented required parameters, no annotations, and no output schema, the description fails to provide adequate domain context. It omits essential details such as option pricing model assumptions, parameter interdependencies, or expected return value format.

Complex tools with many parameters or behaviors need more documentation. Simple tools need less. This dimension scales expectations accordingly.

Parameters2/5

Does the description clarify parameter syntax, constraints, interactions, or defaults beyond what the schema provides?

With 0% schema description coverage across 6 required parameters, the description inadequately compensates by failing to explain critical semantics such as date format for 'expiry' or valid values (Call/Put) for 'right'. While it mentions 'option price' conceptually, it does not map this to the parameter name or document the other five trading parameters.

Input schemas describe structure but not intent. Descriptions should explain non-obvious parameter relationships and valid value ranges.

Purpose3/5

Does the description clearly state what the tool does and how it differs from similar tools?

The description states the specific calculation (implied volatility) and primary input (option price), but fails to differentiate from sibling tool `calculate_option_price`, which performs the inverse calculation. In a domain with complementary calculation tools, explicit scope definition is needed to prevent selection errors.

Agents choose between tools based on descriptions. A clear purpose with a specific verb and resource helps agents select the right tool.

Usage Guidelines2/5

Does the description explain when to use this tool, when not to, or what alternatives exist?

No when-to-use guidance, prerequisites, or comparison to sibling `calculate_option_price` is provided. The description offers no criteria for selecting this IV calculator versus retrieving market data or performing other calculations.

Agents often have multiple tools that could apply. Explicit usage guidance like "use X instead of Y when Z" prevents misuse.

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