Maths wiz please, probabilty formula how too

Discussion in 'Options' started by Digs, Jun 14, 2012.

  1. Digs

    Digs

    Ref: http://www.optionstradingsignals.com/understanding-implied-volatility-when-trading-options-part-1/

    1 Std Dev = 68% Probability
    2 Std Dev = 95% Probability
    3 Std Dev = 99% Probability

    This formula is fine for 1 Std Dev

    1 Std Dev = Price x Volatility x SQRT( Calendar Days/ 365.25)

    68% = Price x Volatility x SQRT( Calendar Days/ 365.25)

    *************
    Question1: Whats the above formula for 2 Std Dev ?

    95% = ???

    Question2: Whats the above formula for any probability percentage ?

    75% = ???

    NOTE: I assume you dont change volatility to fit, as thats a fixed variable.

    Any ideas???

    Thanks
     
  2. TskTsk

    TskTsk

    2 standard deviations is simply standard deviation * 2.
     
  3. Digs

    Digs

    Thanks.. got it..

    But I cant seam to calculate the 1.152.. hows that worked out ?

    Please make as simple example