# Question

Use the same inputs as in the previous problem. Suppose that you observe a bid option price of \$50 and an ask price of \$50.10.
a. Explain why you cannot compute an implied volatility for the bid price.
b. Compute an implied volatility for the ask price, but be sure to set the initial volatility at 200% or greater. Explain why the implied volatility for the ask price is extremely large.
c. (Optional) Examine the code for the BSCallImpVol function. Explain why changing the starting volatility can affect whether or not you obtain an answer.
d. What can you conclude about difficulties in computing and interpreting implied volatilities for deep in-the-money options?

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