Hi

Can someone tell me whether what I am doing is correct.

I have taken the AWEEV Option with a Strike of $3.00. This expires on 26 March 2009.

I am assumed an interest rate of 7%.

The last price for this option is 19.5 cents and the underlying stock was last traded at $2.72.

I have calculated an IM of 38.7%

Now, i have also calculated a historical V of approx 3.1 by using the close prices of the previous 10 days.

Is this method correct?

What errors can you see.

It just doesn't seem right that the IV is so much larger than the Historical V.

Thanks!

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