Explain the uncertain volatility
Explain the uncertain volatility.
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Uncertain volatility: The unseen volatility is an elegant solution for the problem of modelling it is also called uncertain, meaning that this is allowed to lie in a given range but whereabouts in which range it in fact is, or indeed probability of being at any value, which are left unspecified. With such type of model we no longer determine a single option price, but a range of prices, showing best-case scenario and worst-case scenario.
Suppose today's settlement price on a CME DM futures contract is $0.6080/DM. You have a short position in one contract. Your margin account presently has a balance of $1,700. The next three days' settlement prices are $0.6066, $0.6073, & $0.5989. Compu
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