Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: Charles Tutt who wrote (72182)	8/17/2002 1:52:40 PM
From: jonkai	Read Replies (2) \| Respond to of 74651

Precisely how do you propose calculating the volatility to be used in the Black-Scholes equation for this application? exactly the same as you would do for a Chicago traded option for MSFT..... the volitility comes from the STOCK volitility not the option.... the option only follows the stock... for instance if an employee was granted a $50 option today... that expires in January of 2005..... that option today can be valued the same as a chicago $50 option..... going for about $15 a piece...... even though he can't trade it at chicago... it is still that valuable according to the underlying stock the time frame and the underlying stocks VOLITILITY.... if for some reason MSFT wanted that option back from the employee...... or MSFT gave them the right to give it to someone else..... then this is the value for today..... and that value CHANGES with time exactly following the Black scholes formula, till the very day of expiration..... and if there are different expiration dates..... those can be calculated using the same exact formula....