This week's question:
DATE: April 24, 2015
Is there a general rule of thumb when using the price of a straddle to estimate the expected stock price range?
There is a formula that converts the stated volatility percentage, which is the annual standard deviation of stock price movement, to a period of time chosen by the trader. To learn more about how, as a general rule, this formula can be applied to estimate the expected stock price range using the price of a straddle, view this segment of "Ask the Institute."