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The Black-Scholes Model: How Options Get Priced

Options and Derivatives • Beginner Investing • 7 min

The Black-Scholes model, published in 1973 by economists Fischer Black and Myron Scholes, with significant contributions from Robert Merton, is the foundational framework that made modern, liquid options markets possible. Before a widely accepted, rigorous way to price an option existed, options trading was a much smaller, more informal, less liquid corner of the market — the model gave traders, market makers, and…

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