Black Scholes Formula I

[jriver]

I have never heard such complete clarity and brevity in explaining such a difficult equation until I came across to this video! He is an excellent orator when it comes to explaining Black Scholes! Thank you so much for this video. I am going to subscribe you.

[Sam_BD-cv]

Excellent introduction to the topic for beginners. I love this professor's sincereity.

[PankajKumar-otmg]

Never seen such a good teacher like you sir..

[rancoxu]

thx a lot for this clear and comprehensive narration

[niazghumro]

Very informative by professor like you.

[desiquant]

25:42 This seems wrong! If you have interest r for time period [0, T], then the interest rate per interval would be r/n. And, hence the compound interest would be P*(1 + r/n)^{n*T}.

Now, we know that \lim_{n \to \infty} (1 + r/n)^n = e^{rt} And if we raise to the power both sides by T, that is how we get Compound interest to be e^{rT}. What professor has done is absolutely wrong!

PS: T should be time-period in years

[elfadlaouielfadel]

maachallah, you are a good prof.you explain very well

[fattypilou-krkací-prase]

one bit most confusing thing about pricing is the "time value". since it's not exactly true that the value of C option equals to difference between P and K, because there is also the time value. for example if P < K the option still may have the positive value, so this is kind of confusing at first glance, how to do the math regarding this.

[nikhils]

Thank You Sir. Very Well Explained. I have one question..at 20:50 how did you write that differential equation? How S(t) satisfies that differential eqn?

[anoopbains]

great lecture but I disagree on his assessment about people with small account not ot mess with options, infact it is the exact opposite. Options are great instruments for leverage and you can be on wither side of the market . If 95% of the options are never realized that just means you become option seller instead of buyer.

[sfratini]

Why compute the option price based on the time of expiration when in fact, the option holder can execute the option at any time between the time of purchase and the expiration date?

[husnainanwaar]

Yabby you don't put number on the jungle

[danchatka]

Many better videos about options pricing. Try the "Khan Academy" or "Option Alpha" channels.