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I keep hearing option traders talking about the Black and Scholes model. Do I need to know about it?

April 26, 2017Black hearing model option scholes talking traders

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I keep hearing option traders talking about the Black and Scholes model. Do I need to know about it?

1 Answer

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10 Posted

Fisher Black and Myron Scholes were the founders of the Black-Scholes model for pricing an option. The model has five key determinants of an option price: 1.Stock price 2.Strike price 3.Volatility 4.Time of expiration 5.Short-term (risk-free) interest rate We use various variations on that model when we present our option ideas to you.