Dictionary of Accounting Terms: black-scholes option pricing model (OPM)
black-scholes option pricing model (OPM)
formula for valuing stock options designed in 1973 by Nobel laureates Fischer Black and Myron Scholes; also known as the Black-Scholes-Merton model. A model is used to determine the value of option securities prices based on the relationship between six variables-the current underlying asset price, the option strike price, the option time-to-expiration, the riskless return, the underlying asset payout return, and the underlying asset volatility.
