What is the history of Black options trading?

What is the history of Black options trading?

Black options trading refers to the Black-Scholes model developed in the early 1970s, which revolutionized options pricing.

Who were the key figures behind the Black-Scholes model?

The key figures are Fischer Black, Myron Scholes, and Robert Merton, who contributed to its development.

How did the Black-Scholes model impact financial markets?

It provided a systematic way to price options, leading to increased trading volume and the growth of derivatives markets.

Are there any criticisms of the Black-Scholes model?

Yes, critics argue it relies on assumptions like constant volatility and normal distribution, which may not hold in reality.

What are some alternatives to the Black-Scholes model?

Alternatives include the Binomial model, Monte Carlo simulations, and models that account for stochastic volatility.