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Politics : Formerly About Advanced Micro Devices
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To: Dchapman who wrote (31625)4/9/1998 2:46:00 PM
From: AK2004  Read Replies (1) of 1573433
 
Dan
could you define the target for me?
My understanding is that the target price is implied by underlying process that is used in pricing engine. Even simple BS (BS = lognormal stochastic process with constant drift) implies target price.
Do you adjust your profits for risk exposure when you determine the required return on investment? If you do how are you planning to deal with your customers with different utility functions?

>>>>Other option parameters could effect the profit like time value, volit,

strange, volatility would define your risk exposure so by ignoring it you are going into it "blindfolded". Implied volatility(time value) should give you hints if it is over or underpriced but you are the teacher so you should tell me *-))

Regards
-Albert
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