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Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: Tom Chwojko-Frank who wrote (240)	4/25/2001 3:33:59 PM
From: Uncle Frank	Read Replies (1) \| Respond to of 5205

ROFLMAO! Citing Black Scholes usually intimidates skeptics. In your case it was like throwing Brer Rabbit into the briar patch <LOL>. I should have read your occupation as listed on your profile before I used that tactic. A mathematician who wishes he were a physicist that pretends to be a Program Manager. Good show, Tom. duf

To: Tom Chwojko-Frank who wrote (240)	4/25/2001 3:50:32 PM
From: GGorillaGirl	Read Replies (1) \| Respond to of 5205

The differential equation almost answers why. If I were to model options from scratch, I would take for granted the exponential decay in time. The tricky parts are N(d1) and N(d2), which are of order sqrt(t). C = S N(d1) - X exp(-rt) N(d2) Ok, so now d1 is or order sqrt(t), and d2 is of order t. The link defines N(x) as the cumulative normal probability. I like diff. eq., I hate statistics, but I thought that normal distributions were something like exp(-k^2), which again makes it exponential. Could someone get a translator? :-) dGGG