From 49432c9c3461287de72a5426c0f34e1cd52e8d8c Mon Sep 17 00:00:00 2001
From: "dr. mia von steinkirch, phd"
 <1130416+mvonsteinkirch@users.noreply.github.com>
Date: Fri, 17 Feb 2023 11:37:10 -0800
Subject: [PATCH] black-sholes model

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+## black-sholes model
+
+<br>
+
+### tl; dr
+
+<br>
+
+* mathematical equations that estimates the theoretical value of derivatives based on other investiment instruments
+* widely used to price options contracts
+* requires five input variables: the strike price of an option, the current stock price, the time to expiration, the risk-free rate, and the volatility
+* it posits that these instruments will have a lognormal distribution of prices following a random walk with constant drift and volatility
+* it derives the price of a european-style call option
+* assumptions: no dividents are paid out during the life of the options, markets are random, no transaction costs in buying the option, risk-free rate and volatility of the underlying assets are known and constant, the returns of the underlying assets are normally distributed.
+
+
+<br>
+
+<img width="437"  src="https://user-images.githubusercontent.com/1130416/219771677-36198efd-55b3-4729-b7f3-e7660a984140.png">