How do you calculate implied volatility in Excel?


Quick Answer

Calculating implied volatility in Excel requires using Excel's Goal Seek function and an Excel spreadsheet that has been adapted to calculate implied volatility, reports Invest Excel. Adaptable Excel spreadsheets can be downloaded from the Internet. Make certain to use the proper formula design as calculating implied volatility with American and European options varies.

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Full Answer

Volatility is a variable that denotes the volatility or risk return of the option until its expiration, according to Nasdaq. Implied volatility is relative and is based on forecasting or past volatility. American options do not feature closed-form pricing equations; therefore, many techniques have been developed to formulate implied volatility.

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