Write the Black-Scholes formula for a European call option: C = S·N(d₁) - K·e^(-rT)·N(d₂)

the Black-Scholes formula prices

Black–Scholes equation governs derivative prices

d₁ and d₂ are in Black-Scholes: d₁ = [ln(S/K) + (r + σ²/2)T] / (σ√T), d₂ = d₁ - σ√T

d₁ = [ln(S/K) + (r + σ²/2)T] / (σ√T), d₂ = d₁ - σ√T

Black–Scholes model

How can you predict the price of an option?

the Black-Scholes assumptions are

Black-Scholes formula

put-call parity states: C - P = S - K·e^(-rT)

C - P = S - K·e^(-rT)

Interest

Compound interest formula: A = P(1 + r/n)^(nt)