Is anyone telling me that the conversion method for dirty price vol and clean price volatility?Regards

the relationship between clean prices and dirty prices is deterministic .. hence vol must be the same.good luck

nope, clearly price vol will need to be adjusted by the ratio of the dirty to clean price.

You are right .. apologies

Isn't there a more fundamental question here than the vol conversion?Should one build a tree with clean bond prices, using a 'clean price' vol, and add in the accrued interest afterwards? Or should you use the 'dirty price' vol throughout, although the price will then have a varying amount of accrued interest in it throughout the tree.Intuitively I feel using clean prices is better - but then that raises the problem of whether bond price vols are taken be on the clean price or not?

all bond option pricing is of course on the clean price.don't see why one would be interested in the dirty price vol.

For pricing an option on a US Treasury, you're right - you probably wouldn't be interested in the dirty price.But what if you wanted to calculate the Value-at-Risk of a portfolio of bonds? The market value of each bond is the dirty price so applying a 'clean price' vol would overstate your risk, as the dirty price is proportionately less volatile, since it has the non-stochastic accrued interest component.And not every bond is a government treasury.... what about junk bonds with very high coupons, where there is significant default risk, especially as the accrued interest builds up? In general I think it's a tricky issue.