Chapter 28: Mathematical Applications 471 Thus, once the low starting point is chosen and the probability of being below that price is determined, one can compute the probability of being at prices that are suc­ cessively higher merely by iterating with the preceding formula. In reality, one is using this information to integrate the distribution curve. Any method of approxi­ mating the integral that is used in basic calculus, such as the Trapezoidal Rule or Simpson's Rule, would be applicable here for more accurate results, if they are desired. A partial example of an expected return calculation follows. Example: XYZ is currently at 33 and has an annual volatility of 25%. The previous bull spread is being established- buy the February 30 and sell the February 35 for a 2-point debit - and these are 6-month options. Table 28-7 gives the necessary com­ ponents for computing the expected return. Column (A), the probability of being below price q, is computed according to the previously given formula, where p = 33 and vt = .177 (t = .25-V ½). The first stock price that needs to be looked at is 30, since all results for the bull spread are equal below that price - a 100% loss on the spread. The calculations would be performed for each eighth (or tenth) of a point up through a price of 35. The expected return is compute