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Black Scholes Equation

  1. Dec 27, 2004 #1
    Can someone explain the Black Scholes Equation in simple english? What is it used for?

    Thanks
     
  2. jcsd
  3. Dec 27, 2004 #2

    Ivan Seeking

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    Well, I tried but I don't know if it can be put into simple English. :yuck:
    As nearly as I can tell, this is used to estimate the implicit value of certain stocks, including the effects of market volatility, as opposed to the market value at any time which may not be representative of the long term value of that stock. In other words, and I want to stress that I'm struggling here, it seeks to factor out market fluctuations which are not representative of the actual value of a stock.

    http://en.wikipedia.org/wiki/Black-Scholes
     
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