How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: hpeace who wrote (403)	3/3/1997 8:28:00 PM
From: CCWriter	of 14162

Re: Volatility Steve, OK. I understand what volatility is and how it is calculated. Volatility is defined as the annual standard deviation of the stock price. Volatility = (Standard Deviation of Price) / (Average Stock Price) See page 462 of McMillans - Options as a Strategic Investment for the exact equation. Multiply the above by 100 and the units are % per year. McMillan discusses advantages and disadvantages of using straight annual and near-term weighted prices in the calculation of the volatility. We still need to establish what level of volatility can be considered high enough. Are we looking for 20%, 30%, 50%, 100%, or what? Thanks, Blaine

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