To understand Black-Scholes, think volatility

08/15/2013 | TheStreet.com

The Black-Scholes model used to determine stock-option pricing is based on price volatility, specific to the stock being priced, according to this article. The author demonstrates with a graphic showing a volatility scale, proposing that it can be used to calculate the probability that a given option trade will make money. A caveat, however: The author states that he uses proprietary software to value options.

View Full Article in:

TheStreet.com