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Black scholes formula american put option journal entries
The Black-Scholes formula (also called Black-Scholes-Merton) was the first widely used model for option pricing. Here you can get a ready-made Black-Scholes Excel calculator with charts and additional features such as parameter calculations and simulations. Black-Scholes in Excel: The Big PictureIf you are not familiar with the Black-Scholes model, its parameters, and (at least the logic of) the formulas, you may first want to see this page.Below I will show you how to apply the Black-Scholes formulas in Excel and how to put them all together in a simple option pricing spreadsheet.
Risk-free rate:The current entrries free rate of return. This value should be entered in decimal format (e.g., 4% should be entered as 0.04).Spot price:The current opton of the underlying stock.Strike price:The price at which the option contract can be exercised.Time to maturity (days):The time (in days) until the option contract expires.Volatility:The extent to which the returns of the underlying stock will fluctuate between now and the expiration of the option contract.