What are black options in finance?

What are black options in finance?

Black options, also known as black-scholes options, are financial derivatives used to price options based on the Black-Scholes model.

How do they differ from regular options?

Unlike regular options, black options consider factors like volatility and time decay, providing a more accurate pricing model.

Can you explain the Black-Scholes model?

The Black-Scholes model calculates the theoretical price of options using variables like stock price, strike price, time to expiration, risk-free rate, and volatility.

What are the limitations of the Black-Scholes model?

Some limitations include its assumptions of constant volatility and interest rates, which may not hold true in real markets.