How to use Theo Value?

Discussion in 'Options' started by a529612, Jun 18, 2007.

  1. I kind of suspected this is what you were asking rather than anything to do with the "mid of the posted bid/ask". I doubt you'll learn anything meaningful by pursuing this "theo value" garbage because doing so means you found a mechanical method for computing the "correct" current IV based on something other than current market price and that's a slippery road to go down. Whether current IV is correct or not is known only in hindsight and not something found in a mechanical computation. I know of at least two vendors who sell services and software to compute such values but I’m sure they earn more from vending it than from trading it.
     
    #11     Jun 19, 2007
  2. Do you mean accurately?

    :D
     
    #12     Jun 19, 2007
  3. segv

    segv

    Let me send you my closed form solution for put pricing while I am at it.
     
    #13     Jun 19, 2007
  4. Thanks guys. I'm gonna make squillions $$$ £££ !!!!
     
    #14     Jun 19, 2007
  5. what exactly is a theo value?
     
    #15     Jun 19, 2007
  6. MTE

    MTE

    Theo is a guy who comes down to the exchange floor once a week and sets the fair values for all the options.:D

    Theo=theoretical
     
    #16     Jun 19, 2007