Some traders comment about doing backtesting using eod spx data without option data. How is this done and how reliable is the backtesting? Without the option bid ask data and volatility data how can they use only spx eod data to do option backtesting?
IMHO: I think it depends on the accuracy required of the user. That in turn is a function of what they are attempting to do specifically.
One would think that if someone doing that, also incorporates SKEW as well as VXST, VIX, VXV, and VXMT for term relationships, the simplistic accuracy could be greatly improved (over no IV data source).