Methodology

Last updated 14 June 2026.

A calculator is only worth using if you can trust the number it gives you. This page explains how the ComputeYard calculators are built, how we check that they are correct, and exactly what each one assumes. Every tool also shows its formula and a worked example on its own page, so you can reproduce any result by hand. For what ComputeYard is and why it is free, see About.

How the calculators are built

The math lives in a single, pure calculation engine written in Python, kept completely separate from the website that displays it. The same engine powers the interactive calculator, the API, and the shareable preview images, so there is one source of truth for every formula and no chance of two parts of the site disagreeing.

Exact arithmetic, not floating point

Money and rates are computed in exact decimal arithmetic, not the binary floating point that quietly turns 0.1 + 0.2 into 0.30000000000000004. The engine carries 50 significant digits internally and rounds half away from zero only at the final step. Monetary amounts are kept exact all the way through the calculation; ratios and rates are rounded to 8 decimal places for a clean result. In practice this means the figures add up to the cent, with no floating-point drift.

How we verify the math

Every formula is pinned by a suite of golden-vector tests: specific inputs paired with hand-checked expected outputs. If a change ever moved a result by even a fraction of a cent, the tests fail and the change does not ship. The full suite runs automatically before anything reaches the live site, so regressions are caught before you ever see them.

What each calculator assumes

Good estimates depend on clear assumptions. Here is what the main families of calculators take as given:

• Options payoff (options profit): results are profit and loss at expiration for the strategy you build. They do not model time value, implied volatility, or the Greeks before expiry, and they assume you can transact at the prices you enter.
• Covered call and cash-secured put: profit and loss is shown at expiration for the strategy, and the return on the premium is annualised on a simple 365-day basis so you can compare positions of different lengths.
• Implied move: this one is model-based, not a payoff at expiry. It uses the implied volatility you enter to scale a one-standard-deviation move (the underlying price times the volatility times the square root of days divided by 365). It is an estimate of the market's expected range, not a prediction of direction.
• Dividends and DRIP: the calculator steps period by period (monthly, quarterly, semi-annual, or annual) and, with reinvestment on, buys more shares each period at the price you give. Dividend and price growth rates are treated as constant unless you change them. The annual income figure (yield on cost) is the final period's dividend per share times your shares, against the amount you invested.
• Growth and compounding (compound interest, dollar-cost averaging, rebalancing): contributions and returns compound at the rate and frequency you set. Returns are assumed steady rather than path-dependent, so these are planning estimates, not forecasts of any real market path.
• Risk and position sizing (Kelly, position size, Sharpe, margin): the Kelly criterion maximises long-run growth from the edge and odds you supply; position sizing works back from the risk per trade you choose; the Sharpe ratio uses the sample standard deviation of the returns you provide as excess return over the risk-free rate. These tools are only as good as the estimates you feed them.
• Taxes (capital gains, dividend tax): these apply current US federal rules, using the 2025 IRS brackets and thresholds. Capital gains are split into long-term and short-term by a 365-day holding period, and rates are applied to the figures you enter. They do not account for state taxes, the net investment income tax, your full bracket interaction, or your personal circumstances.
• Returns (stock return, crypto profit): these compute realised profit, loss, and percentage return from your buy and sell prices and any income, on the amounts you enter.

What is excluded

Unless a tool is specifically a tax calculator, results exclude taxes, trading fees, commissions, slippage, and bid-ask spread. The calculators do not use live market data; every figure comes from the inputs you provide. Real outcomes will differ, often materially, once costs and real prices are included.

Where the formulas come from

The calculators use standard, well-established formulas from finance and investing: option payoff diagrams, the square-root-of-time scaling behind an implied move, compound interest and annuity math, the Kelly criterion, the Sharpe ratio, and published US tax brackets and thresholds. Tax rules are checked against current official figures and updated when those change. Each tool's page states the exact formula it uses.

Corrections

We would rather fix a mistake than defend one. If a result looks wrong, tell us through the contact form with the inputs you used. We reproduce the issue, fix the engine, add a test so it cannot come back, and ship the fix. Please include enough detail for us to recreate the number.

Not financial advice

Everything here is educational. The calculators give estimates to help you understand the math, not personal investment, tax, or financial advice. Verify independently and, where it matters, consult a qualified professional before acting. See our Disclaimer for the full terms.