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➡️ Part 30 of Quantitative Finance From Scratch: the Black-Scholes formula. A call option is the right to buy a stock at a fixed price (the strike) on a fixed date. Fischer Black and Myron Scholes published the formula in 1973 (Journal of Political Economy), Robert Merton derived it another way, and in 1997 Scholes and Merton received the Nobel Memorial Prize in Economic Sciences. Black had died in 1995. C = S N(d1) - K e^(-rt) N(d2), with d1 = [ln(S/K) (r σ²/2) t] / (σ √t) and d2 = d1 - σ √t. S
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