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To: JGoren who wrote (13504)	1/24/2001 12:37:28 AM
From: Dan Duchardt	Respond to of 14162

JGoren, What is the meaning when the calculated price is substantially higher than the actual price? In this case it means the uncertainty is gone, while the mathematics has forced the historical volatility used for the calculated price to go even higher than it was before the news. The calculated price is artificially high because the historical volatility is being boosted by the big gap, while the certainty of the outcome of the patent case has substantially reduced the expected volatility going forward. In this case, the calculated price does not represent the "fair" price based on what is now known. Whether the real price is fair or not, I don't know. It could still be inflated. But the model for the calculated price cannot account for a big news event, and is certainly inflated. The implied volatility around 50% suggests the new price is reasonably in line with the long term historical volatility that was not so heavily influenced by the gap. Dan