Need to calculate the implied volatility of an at-the-money option on the fly and you left your Nobel laureates at home?? Not a problem…

IV = 40 x p / SQRT(t)

where p is the price of the option (as a % of the underlying) and t is trading days until expiration.

That’s all.? Forget all the complications of the million dollar formula as this gives you all you need.? However, it only works at-the-money, but then again so does Black-Scholes.

So what if the price is between strikes so there is no at-the-money?? Well here is another spiffy formula:

CM = 1.04 – 0.04 * R

where R is the ratio of the more expensive to least expensive options that are nearest to the money.? Just multiply your option price p above by CM and there you have it: the price converted to the at-the-money equivalent.

?