Created in 1973 by Black, Scholes, and Merton. Won the Nobel Prize for Economics. Considered to be one of the most important concepts in finance. It is used to compute the theoretical value of derivatives based on other investment assets. It requires five input variables;… Read More »Black-Scholes Options Pricing Model
A contract that had changes to its underlying due to a corporate action (eg. stock split/consolidation) that results in a change to the multiplier or strike price. The adjustment is made to retain the options value.