-
Bitcoin $85,153.7008
0.19% - Ethereum
$1,611.9471
0.74% - Tether USDt
$0.9999
0.00% - XRP
$2.0824
0.07% - BNB
$594.8487
0.44% - Solana
$141.0161
2.06% - USDC
$0.9999
0.00% - Dogecoin
$0.1592
0.25% - TRON
$0.2430
0.70% - Cardano
$0.6310
0.14% - UNUS SED LEO
$9.3462
-0.44% - Chainlink
$13.0583
1.67% - Avalanche
$19.9002
3.45% - Stellar
$0.2464
0.71% - Toncoin
$3.0068
0.59% - Shiba Inu
$0.0...01238
1.46% - Sui
$2.1560
0.93% - Hedera
$0.1659
-0.64% - Bitcoin Cash
$338.2209
0.30% - Polkadot
$3.9317
5.47% - Hyperliquid
$18.1514
1.10% - Litecoin
$76.7521
0.57% - Bitget Token
$4.5877
3.38% - Dai
$0.9999
0.00% - Ethena USDe
$0.9992
-0.01% - Pi
$0.6419
-0.41% - Monero
$216.9663
1.85% - Uniswap
$5.3190
1.42% - Pepe
$0.0...07480
2.77% - OKB
$50.8919
0.00%
What Is the Black-Scholes Model?
The Black-Scholes model revolutionized options pricing, empowering traders and investors with a tool to determine fair value in the complex world of derivatives.
Oct 17, 2024 at 01:41 am
What is the Black-Scholes Model?
1. Definition:
The Black-Scholes model is a mathematical formula that calculates the theoretical value of an option. It is widely used by options traders and investors to determine the fair price of an option contract.
2. History:
The model was developed in 1973 by Fisher Black and Myron Scholes, who were awarded the Nobel Prize in Economics for their work in 1997.
3. Assumptions:
The Black-Scholes model makes the following assumptions:
- The underlying asset's price follows a lognormal distribution.
- There are no transaction costs or dividends paid.
- The risk-free interest rate is constant.
- The volatility of the underlying asset is constant.
4. Formula:
The Black-Scholes formula for call options is:
C = S * N(d1) - Ke^(-rT) * N(d2)where:
- C is the theoretical value of the call option
- S is the current price of the underlying asset
- K is the strike price of the option
- r is the risk-free interest rate
- T is the time to expiration of the option
- N(d) is the cumulative distribution function of the standard normal distribution
- d1 = (ln(S/K) + (r + 0.5σ^2)T) / (σ√T)
- d2 = d1 - σ√T
A similar formula exists for put options.
5. Applications:
The Black-Scholes model is used for a variety of purposes, including:
- Pricing options
- Hedging options positions
- Developing trading strategies
- Measuring option Greeks
6. Limitations:
While the Black-Scholes model is a powerful tool, it has limitations. It does not account for:
- Transaction costs
- Div
Disclaimer:info@kdj.com
The information provided is not trading advice. kdj.com does not assume any responsibility for any investments made based on the information provided in this article. Cryptocurrencies are highly volatile and it is highly recommended that you invest with caution after thorough research！
If you believe that the content used on this website infringes your copyright, please contact us immediately (info@kdj.com) and we will delete it promptly.
- MoonPay CEO Ivan Soto-Wright Asks Congress to Keep State Regulators Involved in Stablecoin Regulation
- 2025-04-20 13:55:14
- Web3 AI Emerges as a Strong Contender, Outperforming Solana (SOL) and Cardano (ADA) by Delivering Impressive Returns and Enhanced Scam Protection
- 2025-04-20 13:55:14
- Telegram Fires Back, Exposing How French Authorities Only Recently Started Playing by EU Rules
- 2025-04-20 13:55:13
- Pi Network Releases Its Mainnet Migration Roadmap
- 2025-04-20 13:55:13
- A coin, which is going up for auction
- 2025-04-20 13:45:12
- $TRUMP coin has gained some momentum at the start of the long Easter weekend — but not for the right reasons.
- 2025-04-20 13:45:12
Related knowledge
The function of cross-chain bridges in blockchain
Apr 19,2025 at 10:01am
The function of cross-chain bridges in blockchain is a pivotal topic within the cryptocurrency ecosystem, as these tools enable the seamless transfer of assets and data across different blockchain networks. This article delves into the various aspects of cross-chain bridges, explaining their importance, how they work, and the benefits and challenges the...
How the Lightning Network improves Bitcoin efficiency
Apr 17,2025 at 08:56pm
The Lightning Network represents a significant advancement in the Bitcoin ecosystem, aiming to address some of the most pressing issues related to transaction speed and cost. By enabling off-chain transactions, the Lightning Network drastically improves Bitcoin's efficiency, allowing for faster and cheaper transactions. This article will explore how the...
Market value ranking basis in cryptocurrencies
Apr 20,2025 at 05:08am
The market value ranking in cryptocurrencies is a crucial metric that investors and enthusiasts use to gauge the relative size and importance of different digital assets. This ranking is primarily based on the total market capitalization of each cryptocurrency, which is calculated by multiplying the current price of a single unit of the cryptocurrency b...
Analysis of the KYC process of cryptocurrency exchanges
Apr 17,2025 at 05:07pm
The Know Your Customer (KYC) process is a critical component in the operations of cryptocurrency exchanges. It serves as a regulatory measure to prevent fraud, money laundering, and other illicit activities. KYC procedures are designed to verify the identity of users and ensure compliance with financial regulations. This article delves into the various ...
The operating mechanism behind the stablecoin USDT
Apr 20,2025 at 08:08am
The stablecoin USDT, also known as Tether, is a cryptocurrency designed to maintain a stable value by pegging it to a reserve asset, typically the US dollar. Understanding the operating mechanism behind USDT is crucial for anyone interested in the cryptocurrency market, as it plays a significant role in trading and liquidity. This article will delve int...
How is the smart contract defined in Ethereum
Apr 19,2025 at 10:42pm
In the realm of blockchain technology, Ethereum stands out for its innovative approach to executing programmable contracts. A smart contract is a crucial element of this ecosystem, enabling decentralized applications (dApps) to function autonomously and securely. This article will delve into the definition of a smart contract within the Ethereum network...
The function of cross-chain bridges in blockchain
Apr 19,2025 at 10:01am
The function of cross-chain bridges in blockchain is a pivotal topic within the cryptocurrency ecosystem, as these tools enable the seamless transfer of assets and data across different blockchain networks. This article delves into the various aspects of cross-chain bridges, explaining their importance, how they work, and the benefits and challenges the...
How the Lightning Network improves Bitcoin efficiency
Apr 17,2025 at 08:56pm
The Lightning Network represents a significant advancement in the Bitcoin ecosystem, aiming to address some of the most pressing issues related to transaction speed and cost. By enabling off-chain transactions, the Lightning Network drastically improves Bitcoin's efficiency, allowing for faster and cheaper transactions. This article will explore how the...
Market value ranking basis in cryptocurrencies
Apr 20,2025 at 05:08am
The market value ranking in cryptocurrencies is a crucial metric that investors and enthusiasts use to gauge the relative size and importance of different digital assets. This ranking is primarily based on the total market capitalization of each cryptocurrency, which is calculated by multiplying the current price of a single unit of the cryptocurrency b...
Analysis of the KYC process of cryptocurrency exchanges
Apr 17,2025 at 05:07pm
The Know Your Customer (KYC) process is a critical component in the operations of cryptocurrency exchanges. It serves as a regulatory measure to prevent fraud, money laundering, and other illicit activities. KYC procedures are designed to verify the identity of users and ensure compliance with financial regulations. This article delves into the various ...
The operating mechanism behind the stablecoin USDT
Apr 20,2025 at 08:08am
The stablecoin USDT, also known as Tether, is a cryptocurrency designed to maintain a stable value by pegging it to a reserve asset, typically the US dollar. Understanding the operating mechanism behind USDT is crucial for anyone interested in the cryptocurrency market, as it plays a significant role in trading and liquidity. This article will delve int...
How is the smart contract defined in Ethereum
Apr 19,2025 at 10:42pm
In the realm of blockchain technology, Ethereum stands out for its innovative approach to executing programmable contracts. A smart contract is a crucial element of this ecosystem, enabling decentralized applications (dApps) to function autonomously and securely. This article will delve into the definition of a smart contract within the Ethereum network...
See all articles
