Can you find standard deviation of negative numbers? Sure you can. While standard deviation (the result) can’t be negative, the individual numbers that you calculate standard deviation for can reach any value, including negative. How to calculate standard deviation of negative numbers Exactly in the same way you calculate standard deviation for positive numbers, or [more…]

In one word: No. Why Standard Deviation Can’t Be Negative First, let’s stop for a moment and think about what standard deviation represents. It measures variability in a data set. When you have some set of numbers and calculate its standard deviation, the resulting number tells you to what extent the individual numbers in the [more…]

In one word: No. Why Variance Can’t Be Negative The reason is that the way variance is calculated makes a negative result mathematically impossible. Variance is the average squared deviation from the mean. Notice the word “squared”. Why Variance Calculation Can’t Give Negative Result To calculate variance, you: Take each observation (number) in the data [more…]

Black-Scholes Model Formulas and Guides Black-Scholes formulas – Explanation of Black-Scholes formulas for d1, d2, call price and put price. Step-by-step guide to calculation of option prices under the Black-Scholes model. Formulas for option Greeks (delta, gamma, theta, vega, rho). Black-Scholes Excel implementation – Illustrates how the formulas above are implemented in Excel. Detailed guide [more…]

This page explains put option payoff. We will look at: A put option’s payoff diagram All the things that can happen with a long put option position, and your profit or loss under each scenario Exact formulas to calculate put option payoff Calculation of put option payoff in Excel Calculation of a put option position’s [more…]

This page explains call option payoff / profit or loss at expiration. We will look at: A call option’s payoff diagram All the things that can happen when you are long a call option, and your profit or loss under each scenario Exact formulas to calculate a call option’s payoff Calculation of call option payoff [more…]

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