answersLogoWhite

0

See the related link which demonstrates the exact steps you need to follow to calculate implied volatility with Excel's Goal Seek

User Avatar

Wiki User

13y ago

What else can I help you with?

Continue Learning about Math & Arithmetic

How do you calculate the centroid of a trapezium when using a geometic picture?

How do you calculate the centroid of a trapezium when using geometic picture


Is it possible to calculate the chromacity coordinates using absorbance values?

Yes, it is possible to calculate the chromaticity coordinates using absorbance values. The best way to calculate the chromaticity coordinates using absorbance values is by using the formula x = x/x+y+z.


How to calculate percentage using mean?

i want to calculate the percentage of mean value of particular data.


What are two possible uses for physics equations?

Using information about a force to calculate the resulting acceleration..Using the change in the volume of a gas to calculate the change in its pressure.


What determines the price an investor will have to pay for an option?

For listed options there is a quote with an ask price and you can buy the option for that price. If the question is how is that price determined that is much more complicated. Professional options traders use a mathematical formula, usually the Black-Scholes formula, to determine the value of an option. There are several inputs to the Black-Scholes which are days to expiration, strike price, volatility, and risk free interest rate. These professionals offer you the option at a certain ask price or will buy the option at a certain bid price. They make a living from the difference between the bid and the ask price and by using certain hedging techniques. So let's say you wanted to buy an option to buy 100 shares of xyz company for the next 6 months at a price of $100 and xyz is currently selling for $97. We know how many days to expiration, about 182, we know the strike price, $100, and we know the risk free interest rate, about 4%. What we don't know is the volatility. The historical volatility can be calculated and used to calculate the options value. However, for various reasons the option pros may feel the volatility the next 6 months will be different than the historical volatility and set the option price accordingly. This is called the implied volatility. Suppose the option price is $5 bid and $5.40 ask. You could bid $5.20 and maybe someone would sell you that option for $5.20. Remember options represent the right to buy 100 shares so you would pay $5.20 X 100 = $520 plus commissions of about $15 for a total of $535 for 1 option and the stock would have to be $105.35 or more in 6 months for this to successful. Dividends during the period also affect option prices but for simplicity I have assumed there are no dividends.

Related Questions

Where can I find the implied volatility of a specific stock?

You can find the implied volatility of a specific stock by looking at options prices on a financial website or platform, or by using an options pricing model like the Black-Scholes model. Implied volatility is a measure of how much the market expects a stock's price to fluctuate in the future.


How can one effectively short volatility in the market?

One can effectively short volatility in the market by using strategies such as selling options, using inverse volatility exchange-traded funds (ETFs), or employing volatility futures contracts. These methods allow investors to profit from a decrease in market volatility.


Have you tried using a functional equation solver to solve complex mathematical problems efficiently?

Yes, using a functional equation solver can help solve complex mathematical problems efficiently.


How can I use a natural deduction logic proof solver to solve complex logical arguments?

To solve complex logical arguments using a natural deduction logic proof solver, you can input the premises and the conclusion of the argument into the solver. The solver will then guide you through a series of logical steps to derive the conclusion from the premises using rules of inference and logical equivalences. By following the steps provided by the solver, you can systematically analyze and prove the validity of the argument.


Have you tried using a freecell solver online to help you solve challenging freecell games?

Yes, using a freecell solver online can help you solve challenging freecell games by providing you with possible moves and strategies to win the game.


What are the advantages of using the Solver tool instead of the trial and error method to solve a problem in Excel?

Solver allows you to automate the process. It allows you to do things like build in the specifications that you need. Trial and error can be a much slower process and you can make more mistakes. Once you know how to use Solver, it is very useful.


What is volatility in forex?

Volatility is the range in which the price of a financial instrument fluctuates and is one of the most significant indicators to highlight the attractiveness of a trading instrument. Volatility shows the extent of risk involved in using an instrument since the higher the indicator, the bigger the range in which the rate changes over a specified amount of time.


Congress exercises its implied power to investigate by?

Using committees and subcommittees


How did Raphael used implied shapes as an important compositional element in his painting The Madonna of the Meadows?

Raphael the mdonna of the meadows is composed using the implied shape of a?


What is the best approach for solving complex optimization problems using a nonlinear programming solver?

The best approach for solving complex optimization problems using a nonlinear programming solver is to carefully define the objective function and constraints, choose appropriate algorithms and techniques, and iteratively refine the solution until an optimal outcome is reached.


How can I use a predicate logic derivation solver to solve logical problems efficiently?

To efficiently solve logical problems using a predicate logic derivation solver, you should first understand the rules of inference and logical equivalences. Then, carefully input the premises and goals of the problem into the solver, making sure to follow the correct syntax. Finally, systematically apply the rules of inference to derive the desired conclusion. Regular practice and familiarity with the solver will help improve your efficiency in solving logical problems.


John Locke points to WHAT as a solver of worldly disputes?

John Locke points to reason as a solver of worldly disputes. Locke believed that by using reason and rationality, individuals could come to a better understanding of each other's perspectives and resolve conflicts peacefully.