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Black-Scholes - Wikipedia, the free encyclopedia |
 | | The equation was derived by Fischer Black and Myron Scholes; the paper that contains the result was published in 1973. |
 | | If the Black–Scholes model held, then the implied volatility of an option on a particular stock would be constant, even as the strike and maturity varied, and roughly equal to the historic volatility. |
 | | In practice, the volatility surface (the two-dimensional graph of implied volatility against strike and maturity) is not flat. |
| en.wikipedia.org /wiki/Black-Scholes (2109 words) |