Dividend Yield in Theoretical Price Calculation

[Sumit Gupta-5]

I have small question. Is dividend yield parameter a percentage or the amount earned (before expiry of Option)?

Please reply.

Regards,
Sumit

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[Luigi Ballabio]

On Thu, 2009-07-02 at 12:25 +1000, Sumit Gupta wrote:
> I have small question. Is dividend yield parameter a percentage or the
> amount earned (before expiry of Option)?

It's a percentage. A rate per year, actually, so if you have the amount
you'll have to divide it by both the notional _and_ the time to
maturity.

Luigi


--

Things should be made as simple as possible, but no simpler.
-- Albert Einstein



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