Fair Value Formula - Aussie Stock Forums

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  1. #1

    Default Fair Value Formula

    Does anyone know how the fair value of options is calculated?

  2. #2

    Default Re: Fair Value Formula

    Popular models for TheoVal are BSM and Binomial steps. Are you interested in theory, or are you actually after a calculator?

  3. #3

    Default Re: Fair Value Formula

    I guess I am after something that I can put into excel to estimate what a the call will be worth in future (short term).

  4. #4
    Rotaredom wayneL's Avatar
    Join Date
    Jul 2004

    Default Re: Fair Value Formula

    It would entail inputting the correct future realized volatility into whatever model you're using.

    Got a crystal ball?

    Fair value is subjective.

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