Black-Scholes in Python: Option Pricing Made Easy

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Unlock the power of the Black-Scholes model with this easy-to-follow Python tutorial. Starting with importing essential libraries, we'll walk you through defining variables, calculating d1, d2, and deriving both call and put option prices. By 9:41, we deep dive into the intuition behind the Black-Scholes pricing formula. Perfect for finance enthusiasts looking to sharpen their Python skills and understand option pricing!

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Chapters:
0:00 - Import the Neccessary Libraries
1:07 - Define the Variables
3:11 - Calculate d1
4:36 - Calculate d2
4:50 - Calculate Call Option Price
7:29 - Calculate Put Option Price
9:41 - Making Sense of the Black Scholes Pricing Model

Disclosure: This is not financial advice and should not be taken as such. The information contained in this video is an opinion. Some of the information could be wrong. This channel is owned and operated by Portfolio Constructs LLC. Some of the links above are affiliate links, meaning, at no additional cost to you, I will earn a commission if you click through and make a purchase.
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RyanOConnellCFA
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Back in the 90s, I had a fellow classmate get a job at a top ten trading firm on the back of his excel sheet that priced options and had some innovative inputs.... skew etc....

wisemintapp
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Incredible stuff really, really learning alot. Thank you for sharing this content.

kevinomondi
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Thanks Ryan! I really enjoyed this video! I was looking for videos on CFA course content application in Python and I stumbled across yours! Looking forward to more videos from you!

karlpacchio
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Thank you so much for your video. It would be great if you launch any video about volatility calculation. Thanks again

ThinhNguyen-qejr
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Does it work on only european style options or american options?

zeljkolazic
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are you able to use this formula to figure out what the call and put premium can be in the following 1 or 2 weeks as apposed to half a year ?

rohitvbatta
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volatility is not standard deviation of stock prices .. it is the annualized standard deviation for stock price returns

cybrainx
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Ryan, hi! Thank you for defining Nd2, it makes it much easier to understand the whole concept! But could you please define Nd1 in realtion to the underlying price? Why would S be subject to any volatility, if it's a set price right at the start of the contract? Also, going back to your previous video, is binomial model more precise/more widely used in real life? BS model has a lot of crude assumptions. Or it depends on cost/benefit of using each particular approach (BSOP vs binomial)?

victoricus
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Question am not smart. How can i use this if any when it comes to OPTIONS SELLING?

miguelteran-raful