Black-Scholes
A mathematical model for pricing European-style options.
What is Black-Scholes?
The Black-Scholes model is a formula for estimating the fair theoretical price of a European call or put option. It combines the underlying price, strike price, time to expiration, risk-free interest rate, and the volatility of the underlying asset. Though it relies on simplifying assumptions, it remains a foundational tool for valuing options and deriving related risk measures known as the Greeks.