F ad O volatility

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Can someone explain volatility in F and O?

 

[ivanboesky]

Historical volatility is the volatility in stock returns that have already occured, implied volatility is the volatility that is expected by the market.

 

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Thanks!In mathematical terms what are historical and implied volatility.

 

[ivanboesky]

For historical volatility, calculate the daily return from the prices for a given time period. In Excel, use the STDEV() function on the daily returns over a certain time period to compute historical volatility.
For implied volatility, you need to use an option pricing model to back the implied volatility out, given all other parameters.

 

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What =n do you use for implied volatility?Please elaborate.What option pricing model to use?

 

[ivanboesky]

For implied volatility you do not need "n". Use the Black Scholes model.