Open AccessThe Black-Scholes Model Guideline For Options Course As Taught At Notre Dame University - Lebanon
Author(s) -
Rim El Khoury
Publication year - 2011
Publication title -
journal of business and economics research
Language(s) - English
Resource type - Journals
eISSN - 2157-8893
pISSN - 1542-4448
DOI - 10.19030/jber.v4i1.2630
Subject(s) - black–scholes model , order (exchange) , valuation of options , mathematical economics , mathematical finance , guideline , actuarial science , mathematics , economics , econometrics , financial economics , finance , political science , law , volatility (finance)
This paper presents the methodology used for Notre Dame University’s finance students to explain and explore the Black-Scholes model without going through the complexity of mathematics to model random movements or through stochastic calculus. I will name and develop the steps that I follow in order to allow students to properly use the Black-Scholes model and to understand the relationship of the model’s inputs to the option price while monitoring the risk via delta and gamma hedging.