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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study! -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (13501)1/23/2001 11:25:17 PM
From: JGoren  Read Replies (1) | Respond to of 14162
 
Forgive me for some very pedestrian questions. I went to the site with the calculator. I really don't know what the significance of the numbers is. For example, this is what I got on a current Amgen call.

Amgen Historical Volatility:
10-Day 1-Month 2-Month 3-Month
97.31 87.94 73.67 63.17

Feb. 2001 CALL at 75 strike
ImpliedVolatility 50.51
Market Price 1.1875
Calculated Price 3.4904

What does higher historical volatility mean, as you go to 100?

What is the meaning of implied volatility; how do you read the figure.

What is the significance of the calculated price?

And, most particularly, if you have sold a covered call and the price has moved more than you thought so you are at risk that it could get called, what do you look for in these calculations?

Appreciate any help you can give?



To: Dan Duchardt who wrote (13501)1/24/2001 10:15:02 AM
From: JungleCat  Read Replies (2) | Respond to of 14162
 
Dan, thanks for the info. But how about on expiration (Friday). Will my shares be called away, if on the day of expiration, the stock is below my strike price, eventhough it had traded higher earlier than the strike price? If the stock is called away early (assuming the stock price is much higher than the strike price), will I know immediately or will I have to wait for Saturday after expiration to find this out?

Thanks.


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