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Technology Stocks : Dell Technologies Inc.

DELL 138.80

-2.7%

Nov 11 3:59 PM EST

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To: Chuzzlewit who wrote (82441)	11/26/1998 2:40:00 PM
From: BGR	Read Replies (1) of 176387

CTC, You write: If the game were fair, wouldn't you expect that implied volatility be constant? New topic: Now you are certainly correct that theoretically the EV of options is equal to the risk-free interest generated (neglecting spreads and transaction costs etc.). This assumes that pricing is fair. But I believe that we both noted that pricing may not be fair. Furthermore, the plug nature of implied volatility really seems to be a rationalization of pricing rather than a predictor. If it were fair you might expect that implied volatility could be derived from beta, but it can't. Sure, we know that betas are unstable and trend towards 1.00, but what does the variability of implied volatility tell us about how fair the game is? That it is not very fair, and a unusual profits may perhaps be made by trading the implied volatility is the conclusion that I draw. -apratim.

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