Hi there,
Page 21 of the study notes - Implied Volatility example :
For example, assume:
Stock price (S) is $10
Strike (K) is $10
Term (t) is six months (0.5)
Riskless rate is 5%
Call price is $1.25
$1.25 = Black-Scholes [$10, $10, t=0.5 years, r = 5%, ]
Solve for the implied volatility: .405
Can someone explain me how you get the implied volatility please ? It drives me nuts .....
Page 21 of the study notes - Implied Volatility example :
For example, assume:
Stock price (S) is $10
Strike (K) is $10
Term (t) is six months (0.5)
Riskless rate is 5%
Call price is $1.25
$1.25 = Black-Scholes [$10, $10, t=0.5 years, r = 5%, ]
Solve for the implied volatility: .405
Can someone explain me how you get the implied volatility please ? It drives me nuts .....