How To Fix T8231 - Option valuation: Normal model only supported for IR options

SAP Error Message - Details

• Message type: E = Error

• Message class: T8 - Analysis system evaluations

• Message number: 231

• Message text: Option valuation: Normal model only supported for IR options

What causes this issue?

The normal distribution model is only supported for options on interest
rates:
Swaptions
Caps/Floors
Interest rate guarantees

System Response

The option price is not calculated.

How to fix this error?

Make sure that the option is valuated using a different model. You do
this either
By changing the valuation model in the valuation rule &V1& or
By assigning another valuation rule to the option.

Procedure for System Administrators

The system issues an error message and will not allow you to continue with this transaction until the error is resolved.

Error message extract from SAP system. Copyright SAP SE.

Smart SAP Assistant

• What is the cause and solution for SAP error message T8231 - Option valuation: Normal model only supported for IR options ?

  The SAP error message T8231, which states "Option valuation: Normal model only supported for IR options," typically occurs in the context of financial instruments, particularly when dealing with options in the SAP system. This error indicates that the valuation method being used is not compatible with the type of option you are trying to evaluate.
  Cause:
  
  Model Mismatch: The error arises when a valuation model that is designed for interest rate (IR) options is being applied to a different type of option (e.g., equity options, commodity options, etc.).
  Configuration Issues: There may be a misconfiguration in the settings for the option valuation in the SAP system, leading to the system attempting to use the normal model for an unsupported option type.
  Data Entry Errors: Incorrect data entry or selection of the option type during the valuation process can also trigger this error.
  
  Solution:
  
  Check Option Type: Ensure that the option you are trying to value is indeed an interest rate option. If it is not, you will need to select a different valuation model that is appropriate for the type of option you are working with.
  Review Valuation Model Settings: Go to the configuration settings in SAP for option valuation and verify that the correct model is selected for the type of option you are valuing. You may need to consult with your SAP administrator or financial expert to ensure the settings are correct.
  Use Appropriate Valuation Method: If you are dealing with a non-IR option, switch to a valuation method that supports that specific type of option. This may involve using a different pricing model or adjusting the parameters used in the valuation.
  Consult Documentation: Refer to SAP documentation or help resources for guidance on the specific valuation models available and their compatibility with different option types.
  
  Related Information:
  
  SAP Notes: Check for any relevant SAP Notes that may address this specific error or provide updates and patches that could resolve the issue.
  Transaction Codes: Familiarize yourself with transaction codes related to option valuation in SAP, such as those used for configuring financial instruments or running valuations.
  User Forums: Engage with SAP user communities or forums where similar issues may have been discussed, and solutions shared by other users.
  
  If the problem persists after trying the above solutions, it may be beneficial to reach out to SAP support for further assistance.