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Technology Stocks : Dell Technologies Inc.

DELL 125.97

-1.0%

Nov 25 3:59 PM EST

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To: Jeffry K. Smith who wrote (112842)	3/27/1999 11:27:00 AM
From: Chuzzlewit	Read Replies (2) of 176387

Jeffry, the implied volatility is one of the parameters that determine the price of an option in the Black/Sholes model. The others are time, striking price, stock price, interest rate and dividends. Unfortunately, you cannot measure volatility directly, but since all of the other parameters are known, including the price of the option, the volatility can be calculated. Hence the term implied volatility. The higher the volatility the higher the price of the option. Some of us key options trading decisions to a comparison of the implied volatility (IV) and the historic volatility. If the implied volatility of an option is much lower than its historic volatility it might not be a good idea to sell (write) options, and it might be a good time to buy options. Hope this helps. TTFN, CTC

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