Black-Scholes Option Pricing Model
Interactive

Black-Scholes Option Pricing Model

Intuition Publishing
Updated Sep 24, 2020

The Black-Scholes model for pricing options was one of the most important developments in options trading. It led to a boom in the market as the pricing of European-style options was simplified considerably, and pricing formulas based on Black-Scholes are still used extensively by option market participants today. Here we give a breakdown of the elements of the formula, and illustrate the pricing process using a basic example.