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To: Ojing Eo who wrote (4958)	4/15/1999 2:28:00 PM
From: Just_Observing	Read Replies (2) \| Respond to of 6021

Ojing Eo, you said "Very good. This calculation must assume some very efficient markets. I could calculate historical share prices by plugging historical earnings into a formula, but the result would have a lot of error. Why would the option price calculation be more accurate ? " Here we are trying to find the price of options based on the stock price. We are not trying to guess the stock price. Knowing the volatility and the stock price, you can calculate the option price very accurately (winthin a few percent). Sorry if my post was not clear on that point. Please note that the Black-Scholes model does not work well near earnings releases (errors of 20% or higher). Or near big events such as analyst meetings etc. (Other models may work better). There you may need the historical pricing.