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Strategies & Market Trends : The Covered Calls for Dummies Thread

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To: Dan Duchardt who wrote (3188)	12/21/2001 11:16:58 PM
From: Dominick	Read Replies (2) of 5205

Dan: Bernie Schaeffer in his book "The Option Advisor" said volatility depend on the square root of time. If you didn't have an option's calculator he gave the following method: Find the 52 week high and low in newspaper. Then High minus low, divided by (high + low)/2. This is the yearly volatility. Let's say it was 34% Since this was based on price it is historical volatility. If your holding period is 90 days, which is equal to a quarter of a year, and volatility depends on the square root of time, you square root .25 and get 0.5. Then multiply 0.5 * 34% = 17%. Multiply 17% * the stock price and add the result to it for the high range and subtract from it for the low range. Bottom line, it's basically the same thing you were saying but I didn't care. Even if I'm wrong, I just wanted to type this anyway cause I luv this stuff. :) I admit it, if I get a little knowledge I'm dangerous. Hoadley provides a very generous service for free. I'm buying what ever he has, he's worth it. dm@domisdangerous.com

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