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Strategies & Market Trends : Options 201: Beyond Obi-Wan-Kenobe -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (771)	2/24/2003 6:32:02 PM
From: tyc:>	Read Replies (2) \| Respond to of 1064

I have been dense and stubborn.... I'm no longer stubborn, but still dense. What follows is not argument but just an attempt to reveal my lack of understanding, which you may be able to help. I (read, "my son") followed your instructions on the same 50 days of AGE data and came up with the same 50% volatility figures. Now we must try to understand what it means. It seems to me that the Bollinger Bands worked with closing prices, and therefore the results were in dollars, and my "2 sd range" could be related to prices showing a range above and below the current price that coincided with the width of the BB's. All neat and tidy, indicating a volatility input that would produce a 2SD range to coincide with how closing price had recently acted. But the Historic Volatility calculation works with percentages..... Doesn't the 50% volatility result indicate what volatility of percentage price changes to expect ? Do you think that my "2SD" range, which shows in dollar prices have any validity if what I have input is a volatility figure that relates to percentage of change ? Can we talk about the statistical significance of that 2SD range produced by an input of the 50% historic volatility ?