We take the underlying stock price, the break even point (target price), the days to expiration, and the 52-week historical volatility, and then use those figures in this formula. Depending on the strategy, we use the above or below probability (i.e., the probability the price crosses th...
usedforcommonstockanalysisbyestimatingdividendpaymentsandchangeinpriceover agiventimeframe,theuncertaintiesinvolvedaremuchgreater. 2.Themostcrucialassumptiontheinvestormakesisthatcashflowswillbereceivedinfull andreinvestedatthepromisedyield.Thisassumptioniscrucialbecauseitisimplicitinthe mathematicalequationthatsolvesforprom...