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To: niceguy767 who wrote (221912)	1/2/2007 9:31:36 AM
From: Biomaven	Read Replies (1) \| Respond to of 275872

Implied volatility in the B-S model is a function of "historic" prices Nope. Implied vol is the number you get when you put the price, strike price, stock price and risk-free interest rate (plus dividend, if any) of the traded option into the Black-Scholes model and solve for volatility. (There is no closed-form solution, so it has to be done numerically). It has nothing to do with historical vol, which is a backwards-looking number, while implied vol is a forward-looking number. Peter