pressing the =

Table 7-1

Item

Description

 

 

Stock price (input)

Current underlying asset price

 

 

Strike price (input)

Predetermined price at which the option agrees to buy or sell the underlying

 

asset at maturity.

 

 

Time to maturity (input)

Time remaining until expiration of the option in years.

 

 

Risk free% (input)

Current risk-free interest rate (for example, the current US Treasury Bond rate).

 

 

Volatility % (input)

Degree of unpredictable change of the stock price. This is usually approximated

 

by the standard deviation of the variation of the stock price.

 

 

Dividend % (input)

Estimation of the average dividend yield of the stock as a percentage of its price.

 

 

Call price (output)

Estimated fair market value for a call option at expiration (a call option is the

 

right to purchase the asset at a given price).

 

 

Put price (output)

Estimated fair market value for a put option at expiration (a put option is the right

 

to sell the asset at a given price).

 

 

Note that if you enter a history of the underlying asset price and its yield in the data menu, key on the Volatility % menu item automatically calculates the standard

deviation of the variation of the asset price based on the given data. Pressing =in the

Dividend % menu item automatically calculates the average dividend as a percent of the asset price.

Black-Scholes Calculation Menu* 53

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HP 30b Professional, 20b Consultant Financial manual Volatility % input
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30b Professional, 20b Consultant Financial specifications

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