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Technology Stocks : Cisco Systems, Inc. (CSCO) -- Ignore unavailable to you. Want to Upgrade?

To: rkral who wrote (64150)	6/1/2003 9:20:51 AM
From: RetiredNow	Read Replies (2) \| Respond to of 77400

LOL. I think your previous post shouted "en garde" and Lizzie just delivered you a toucher! Here's where you say, "touche!" :)

To: rkral who wrote (64150)	6/1/2003 1:47:00 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 77400

OK, here is a definition where I am concluding the bottom 2 issues are "risk premium". The truth is that I personally don't see much volitility in interest rates for the forseeable future, although this is not my forte, still I assume the correlation coefficient of interest rate to be effectively 1 for any model of this sort. That means that I equate risk premium to be almost entirely volitility. The Black-Scholes Formula The Black-Scholes formula was the first widely-used model for option pricing. This formula can be used to calculate a theoretical value for an option using current stock prices, expected dividends, the option's strike price, expected interest rates, time to expiration and expected stock volatility. While the Black-Scholes model does not perfectly describe real-world options markets, it is still often used in the valuation and trading of options. The variables of the Black Scholes formula are: Stock Price Strike Price Time remaining until expiration expressed as a percent of a year Current risk-free interest rate Volatility measured by annual standard deviation.