In 1973, the world of finance witnessed a seismic transformation thanks to the brilliance of two exceptional minds from MIT: Fischer Black and Myron Scholes. Their groundbreaking research unlocked trillions in transactions, forever changing the way we value options.
Teaming up, Fischer Black and Myron Scholes unleashed their masterpiece, “The Pricing of Options and Corporate Liabilities,” in 1973. This work was nothing short of revolutionary, introducing a mathematical marvel that could determine option prices by considering factors such as spot price, strike price, time to expiration, volatility, and risk-free interest rate.
Yet, their groundbreaking research faced fierce rejection from scholarly journals, sparking a battle to earn the recognition it so deserved. But undeterred by setbacks, Black and Scholes fearlessly put their theory to the test in the real-world trading arena.
Walking the talk, they validated their model and demonstrated its remarkable effectiveness. The results spoke for themselves, leaving no doubt about the power of their approach.
Sadly, Fischer Black’s extraordinary journey was tragically cut short on August 30, 1995, leaving a void in the financial world. However, his impact and legacy continue to resonate.
In 1997, the Nobel Prize in Economic Sciences recognized the groundbreaking nature of the Black-Scholes Option Pricing model. Myron Scholes, alongside Robert C. Merton, who further developed the model, claimed this prestigious honor. The Nobel Committee hailed their method as a catalyst for the rapid growth of derivatives markets and an indispensable tool in economic analysis.
Today, we owe a debt of gratitude to Fischer Black and Myron Scholes for their unwavering pursuit of knowledge and their determination to challenge the status quo. Their groundbreaking research forever transformed the financial landscape, empowering countless individuals and institutions to navigate the complexities of option pricing with greater confidence.
Thrilled to share that on our Options Trader Web our Options Greeks are calculated as per BSM model . @Naman wrote about it here, do check it out.
