You don't need to know the algebra for the Black-Scholes valuation formula to make money from it, but you do need to understand it so that you don't make mistakes that cost you money. This blog-cheat-sheet will help you understand the basics for Black-Scholes, specifically the details needed to trade binary options.
First of all, the basics: Black-Scholes is a Nobel Prize winning formula that was created by Fischer Black and Myron Scholes - two very intelligent economists from MIT and Harvard. Fischer Black and Myron Scholes worked together at to create the formula after first working on the famous Capital Asset Pricing Model (CAPM), which was proven to not be as accurate for certain investments. They worked on the kinks and problems of the formula with Robert Merton for nearly 3-years from 1968 to 1971 eventually coming up with the Black-Scholes model which was eventually used to establish an investment fund that at first made some reasonable gains, but then lost nearly all of its value at a staggering loss of over $4,000,000,000 for investors. Since then it is not longer considered a long position investment and is primarily used by day-trader dealing in binary options.
Now you know, and the more you know, the better you will trade, so keep on reading.
First of all, the basics: Black-Scholes is a Nobel Prize winning formula that was created by Fischer Black and Myron Scholes - two very intelligent economists from MIT and Harvard. Fischer Black and Myron Scholes worked together at to create the formula after first working on the famous Capital Asset Pricing Model (CAPM), which was proven to not be as accurate for certain investments. They worked on the kinks and problems of the formula with Robert Merton for nearly 3-years from 1968 to 1971 eventually coming up with the Black-Scholes model which was eventually used to establish an investment fund that at first made some reasonable gains, but then lost nearly all of its value at a staggering loss of over $4,000,000,000 for investors. Since then it is not longer considered a long position investment and is primarily used by day-trader dealing in binary options.
Now you know, and the more you know, the better you will trade, so keep on reading.
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