Black Scholes N(d2) EXPLAINED!

[@pr0skis]

This is by far the best explanation of the BSM option pricing model! Love this channel! Keep up the good work!

[@cuongagl]

Best explanation ever! Superb!

[@annwang2990]

This is the clearest explanation of BSM, thank you so much!

[@hoogleyboogley]

Thank you for posting this video. it is excellent!

[@AmirTaghaboni]

Amazing explanation,

[@iamnoone8414]

THANK YOU!!! This is a great tool for understanding one of the basic building blocks to EXAM MFE pricing.

[@MomentsInTrading]

You may like another one of my videos as well. This will also help on your finance exam- kzbin.info/www/bejne/aZjGfYWLZ5lgrZI

[@iamnoone8414]

Yes, thank you. I was actually planning to study that tomorrow. That will be a huge help . . Again, thank you so much. My pages of formulas actually make sense now. :)

[@Abc2010]

Great....just at 12:40 where you mistakenly put it as ln(K/S)..but great explanation!

[@K2Jification]

Excellent

[@cynacacia]

A million thanks!

[@butifarra61]

thanks...something interesting in youtube...

[@anindadatta164]

Is it possible for you to create a similar video for N(D1)

[@kaushikvankadkar8430]

You are amazing

[@niketankotadiya9542]

sir can you explained why we calculate negative z score?

[@michaelandoniades3292]

When you listed d2 in the beginning of the video, it was with respect to time. Why is it when d2= -Z... Z is not computed with respect to time? When finding the percentage to the right of the Z score, how would the equation account for the expiration date when the Z score was not computed with respect to (T-t), or the time until expiration? Please help thank you

[@wenjunchang7668]

best explanation! thx for saving my asssssssss

[@BlueIceAce2015]

Are you a professor?

[@MomentsInTrading]

No, I am a trader. I am self-taught in everything that I am teaching in my videos.

[@MomentsInTrading]

For more on the same subject, please see my video on Monte Carlo Simulation- Understanding and Creating Monte Carlo Simulation Step By Step

[@tekmomentsintrading5588]

Thanks :) I plan on doing a vid on N(d1), but it will be a bit. It took a long time to think out how o do N(d2) without making it an hour long and without including a bunch of confusing math (I left out Ito's Lemma for instance). I will give you some things to think about with N(d1)- If a stock is $10, a $10 call has no intrinsic value. The value (the cost) comes from the volatility (the standard deviation), and the time remaining until the option expires. Cont-

[@tekmomentsintrading5588]

Cont'd- N(D2) is the probability that the option will or will not expire in the money N(d1) is N(d2) plus the standard deviation. If I remove the standard deviation from N(d1), the value of a $10 call on a $10 stock becomes 0 plus 'the time value of money.' N(d1) makes the value of the call 0 if the stock is at or below the strike price at expiration, and finds the value of the call if the stock is above the strike price. The main factor in determining the value is the standard deviation.

[@tekmomentsintrading5588]

It should be ln(k/s) at 12:40. Remember that ln(k/s) = - ln(s/k)