Backward adjustment for dividend in volatility estimation

Discussion in 'Options' started by ferrycorsten, Nov 3, 2013.

  1. When measuring volatility and you have a dividend, you are supposed to multiply prices before the exdividend date by an adjustment factor, which is 1-(dividend/price). My question relates to the "price" variable. Is it referencing the price on that specific day? Or is it the price today?

    What happens when you have two dividends in a price series? Do you just double the dividend in the equation?