

BlackScholes Option Pricing Model 





The BlackScholes Option Pricing Model predicts an option's price given the strike price, expiration date, riskfree rate of return, stock price, and standard deviation of the stock's return. Wall Street was quick to adopt the BlackScholes Option Pricing Model in the early 1970s although key assumptions of the BlackScholes Option Pricing Model are obviously violated in the real world. In many contemporary Wall Street applications, more refined pricing models that adjust for these violations have replaced the seminal BlackScholes Option Pricing Model. Large segments of the financial sector emerged due to the success of the BlackScholes Option Pricing Model. Myron Scholes shared the 1997 Economics Nobel Prize with BlackScholes Option Pricing Model development collaborator Robert Merton for this work. Fellow BlackScholes Option Pricing Model namesake Fischer Black had passed away in 1995, but would have shared the award. Learning to derive the BlackScholes Option Pricing Model is a key part of any mathematical finance curriculum today.
Rate this BlackScholes Option Pricing Model definition...




Where is the market headed? The answer may surprise you. Find out with the exclusive & Barron's recommended charts of Chart of the Day. 

Popular Terms: stock market close, 1031 exchange, risk management, exdividend date, average price per share, Zero Cost Collar, 1035 exchange, implied volatility, option premium, inflation, debt service coverage, real GDP, phantom income, class C shares, labor relations, current ratio, covered put, irrevocable trust, annual return, exdividend, FICO score, APR, Key Rate Duration, margin rate, FTSE, command economy, LIBOR, 144a, stock split, open position, dividends payable, balance sheet, reverse mortgage, VIX, liquidity ratio, EBITDA, 401a, required rate of return, deferred revenue, diluted share, per diem, minority interest, in escrow, retained earnings, whollyowned subsidiary, deferred tax, cancelled check, limit order, quality assurance


 