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Gold/Mining/Energy : Corner Bay Silver (BAY.T)
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To: Claude Cormier who wrote (4324)6/20/2002 6:29:18 PM
From: Canuck Dave   of 4409
 
I have come to a similar point of reasoning (not a conclusion, LOL).

I looked at how the Black-Scholes (BS) formula works and it basically scales the future values of option price by the square root of time. As an aside, the BS formulation looks a lot like something I used to deal with in oceanography called turbulent diffusion of passive scalars (i.e. how fast would two surface drifters separate?).

Not surprising, since both regimes are considered to obey Normal distributions, with the 'volatility' a close proxy to a diffusion constant. The 'separation distance' becomes the difference of the future price of the equity relative to its current price. The other factor in BS is the 'risk free' interest rate, which inflates all prices over time.....

Kind of esoteric, but fun to speculate. US dollar still sinking.

CD
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