Black Scholes Option Calculation

Black Scholes Option Calculation

See Also:
Common Stock
Dispersion
Binomial Options Pricing Model
Efficient Market Theory

Black Scholes Option Calculation Model

The Black Scholes option calculation (stock option pricing formula) uses five variables to compute the price of a stock option. The variables are the time remaining until the stock option expires, the price of the underlying security, the strike price of the stock option, time value of money, and the volatility of the underlying security.

Black and Scholes

Fischer Black and Myron Scholes developed the Black Scholes stock option pricing formula in the 1960s in an effort to solve the problem of determining fair prices for stock options and other financial derivatives. Therefore, use the formula to price various financial derivatives. There are several variations of the Black-Scholes formula, and there are also other formulas used to price options and other financial derivatives.
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