Black Scholes Calculator
Calculate option prices using our Black-Scholes Calculator. Accurately price stock options with ease. Try our free calculator now and make informed investment decisions.
Black-Scholes Formula
The Black-Scholes formula is a mathematical model used to calculate the theoretical value of European-style stock options, assuming that the underlying stock prices follow a lognormal distribution with constant volatility and that there are no transaction costs or taxes.
The formula takes into account six variables: the current stock price, the option strike price, the time until expiration, the risk-free interest rate, the implied volatility of the stock price, and the dividend yield of the stock.
The formula is as follows:
S = current stock price K = option strike price t = time until expiration (in years) r = risk-free interest rate σ = implied volatility q = dividend yield d1 = (ln(S/K) + (r - q + σ²/2)t) / (σ * √t) d2 = d1 - σ * √t Call option price = S * e^(-q*t) * N(d1) - K * e^(-r*t) * N(d2) Put option price = K * e^(-r*t) * N(-d2) - S * e^(-q*t) * N(-d1)
Where N() is the standard normal cumulative distribution function.
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