Option Pricing

In near twenty years, negotiable securities derive from finance developed quickly. Mathematician and economist from domestic and abroad take great interest in this option issue and many specialists have realized that if we want to manage the risk effectively, first we should have a proper appraisal to it. So how to make a fare price for the option is the key that they can be exist and develop. Hence bring and perfect the theory of option pricing will have an important meaning for the development of option market, e.g. subjective and blindness can be avoid on option pricing problem, bargainers can be dealing fare and reasonable. By using the approach, one can avoid risk effectively and dare to bear the risk, invest and keep on transaction. All these things can be the great engine for the development of market economy. In this paper, one of the import factors in B-S model, Volatility(σ)has been explained and estimated in detail, also, the actual example of call option such as HXB1 has been analyzed. The main task is to choose several volatilities from different time and compare. We have found that the time interval we choose has a great effect on volatility.