Black-Scholes Option Pricing Model -- Intro and Call Example

[@MDMCS-rf2ef]

This is one of the best explanations I've ever seen to explain a topic this complex

[@kevinbracker]

Thank you!

[@luis.jurado8021]

10 years later and its still gold, watching this video before my financial derivatives final 🙏🏼😂

[@benvel2302]

Explained better than 99% of all university teachers in the world. Hello from Australia, thank you so much

[@kevinbracker]

Appreciate the feedback!

[@consentads]

Thank you

[@navyman4]

Who else feels smart they understood this? Actually, all credit goes to Kevin Bracker. He did an excellent job!

[@rezivillehulgado2497]

This was great, I have been researching "mispriced items law michigan" for a while now, and I think this has helped. Have you ever come across - Genubrey Mispriced Infiltration - (Have a quick look on google cant remember the place now ) ? Ive heard some pretty good things about it and my partner got excellent success with it.

[@abbynyamima8460]

Meeeeeeee am so proud of myself

[@sudhindrak]

Explaining a complex subject in the simplest terms is not easy and this was very well done. Thank you Kevin!

[@andrewmanundu2273]

Thank you for the explanation

[@romysinghsingh58]

Hi

[@翠-m9m]

I was frustrated from frm's readings and now you clear all the doubts and ambiguities at once. You have earned my admiration and respect, sir

[@aininaasdi9132]

am watching this 10 years later and I understand the whole process a lot better. Love the simple explanation. Thank you Kevin!

[@yousefsafa5248]

Great video series on Black-Scholes. Took the mystery out for me.

[@MySuperfly7]

Every view you have is some kid somewhere who is absolutely stoked they came across your content. Saving my semester! Bracker 2020

[@financelife7211]

You are a total blessing to me, am studying financial risk management, black schools option pricing model...you can imagine how you have helped me understand the formula. Hug hugs

[@abdirahmanagane2903]

Black Scholes not school

[@timwilliams4124]

Wow.. This was very helpful. I never understood what "e" or "ln" was or how to calculate it until now! Thank you!

[@kevinbracker]

You're welcome.

[@miyurinorris158]

I have my final exam in corporate finance tomorrow, and I was just absolutely thrown by this concept. Thank you, SO much! You've managed to make this seem incredibly easy. I almost feel dumb for not understanding it initially.

[@marysmith3710]

This is the absolute best explanation /lesson on Black-Scholes. Thanks a million.

[@anneshaneogy3042]

I cannot CANNOT thank you enough, sir. I am indebted . May you live a thousand years and more.

[@kevinbracker]

Thank you

[@pevolinchetty3860]

The video explained the Black-Scholes Option Valuation Model exceptionally well. Really beneficial to newbies of this pricing model.

[@mivedi]

Person like you should teach in the university, who can make most difficult issue easy. My FM prof. still doesn't give any real world example regarding option pricing but you are genius. my admiration and respect for you.

[@alexrozenbom3430]

This series is probably the best on You-Tube for options pricing theory. Thanks Kevin !

[@texan4958]

Who goes to heaven? Kevin Bracker or me? This is outstanding. Thanks for taking your time for us sir.

[@hawkinsuhc]

I have never really had problems with any type of math formulas. I have had to work a little harder solving some moreso than others, however, I could never NOT solve them. Then came Black-Scholes. I was truly flabbergasted. Then I saw your tutorial and excel sheet. It is excellent. It walks you through everything! Thank you so much!!!

[@Herrio]

Wow. This was excellent. I used the Black-Scholes online calculator and then used this and I got the same numbers. You are a phenomenal educator!

[@exhawkstead2440]

you literally saved my life with this thank you so much

[@kevinbracker]

I hope you're using the term "literally" to imply "figuratively" or the BS OPM is even more powerful than suspected! 🤣🤣

[@FalsafiAadilkhan]

Goodness....... nobody can explain this way. Excellent job Kevin! Hats off to you. Thanks a lot. Didn't expected that I would found this much elaboration on the topic.

[@vrl9037]

I have an exam on this tomorrow. This video was excellent, thank you!

[@aniruud]

Got my Finance exam in a couple hours. You just saved my life! Thank you!

[@KatzeMuffelLebt]

Very nice explanation, slow and patiently, always going back to the formula and explaining _every_ step. Nice video, thanks

[@alikhalil9728]

You are the best. Ali khalil lawyer from Lebanon

[@Asmrani1974]

Super Excellent . Thanks Kevin for this valuable lecture

[@gracexcels]

13yrs later and it's a blessing

[@kevinbracker]

Thank you!

[@CosmicBarrilet]

Thank you Kevin,.... i was studying with "Maths of Financial Derivatives " and your video are strong complement....

[@goruloveguy]

I have no words to express my thank you . These videos have saved my harvard days of investment class

[@annenglish9171]

This is a seriously great explanation. I've watched several videos on this topic today and none helped me to understand. Yours did. Thanks so much!

[@Luciferking4444]

Explanation is very good & easy to understand

[@thebookwasbetter3650]

Had an accounting professor who used the 'chalkboard method' of teaching where you write it out instead of using power point presentations (of which there are way too many of in business school.) When you write it out, it really does feel like you are with the professor the entire time. Like your minds are one.

[@MinerMetinAKTAN]

Using spread sheet and norm table are very useful to understand the main point. Thanks Kevin!

[@sokha55]

The most practical one compare to other explanation and examples

[@dineshsiva2491]

really wish you were my uni lecturer, saw this after struggling to understand my lecture even after watching it like 5 times

[@alefkm]

omg thank you very much. This video was way more (really much more) useful than the two hours with my university professor who cannot explain anything right

[@lokironin6934]

Not all Heroes wear capes! I sincerely thank you for this explanation. Best wishes

[@Ca_Shyamjha]

It's worth watching.... Thanks Mannn.. 🤝

[@jonassteinberg3779]

I'm so glad you posted this clear and concise demonstration of the BSOPM. As a math major, I had always been curious about this model because my friends in the financial mathematics program were always talking about how fundamental it was to their studies. Now that the BSOPM is demystified some I don't feel as intimidated by it as when I knew nothing of it, a similar experience as when another youtube video demystified Fourier series calculations for me. Thanks!!!

[@abc33944]

Using a real life example was very helpful .. thanks !

[@geldersbart3108]

OLD but GOLD!

[@madmuke]

Wow you did in 13 mins what my 400 level college Instructor couldn't do in 3 hours :)... great job sir

[@vishalkanojia9634]

At 11:08 when I saw the formula it didn't looked scary anymore n I felt like this is easy🙏🙏😍.. You are really amazing.

[@biplobmukherjee1]

Explained very well,thanks.

[@isurusenevirathne]

Clearly explained every steps

[@LuisJimenez-si3le]

Hey, Kevin! Thanks a lot for the file. Everything is clearer thanks 2 U!

[@kevinbracker]

You're welcome...glad it helped.

[@ElBellacko1]

You explain it good, im glad I found this video thanks 😊

[@HoangDuong-mi4ow]

Great explanation sir. Thank you!

[@paradoxdea]

Thank you Kevi , for expertly explaining this viable concept. You're very intelligent, so I know that I can learn valuable tips from you. You just earned a new subscriber!!

[@drexelbrown9519]

Thank you for explaining option pricing with Black & Scholes!

[@juan-3350]

10 years old vid belong me understand the formula 🤔🙏🏼🙏🏼🙏🏼 thank you

[@christopherhamilton8475]

Kevin did an excellent job. Thank you, sir!

[@lukwesamathews4293]

This is so helpful.

[@walterkabeo7563]

This was awesome...I now understand BSM-OPM..Many thanks to Kelvin

[@sandeepminhas6491]

Wow great video and very clear information. Was having some problems with the formula but you make the whole formula seem very easy. Your method is also different to the way my lecturer taught us however I much prefer yours. Thanks again!

[@gauravjain7355]

Thank you so so so much. On Teachers day in India I wish you a very happy Teachers day. I understood black Sholes just coz of this video.

[@kevinbracker]

Thanks!

[@Eshiemokhai]

Great video. Your explanation has improved my understanding of this topic. Thank you

[@jamesrodriguez7953]

So helpful !!! tnx, this example let me finish my eternal homework in no time :D

[@700gmat]

this was so helpful i finally understood you're a great teacher ! thank you

[@classic_petter]

Damm teacher I read 2 chapters of this in my book and I didn’t understand nothing, now all the things seems to easy with the video....thanks 🙏

[@harryknickerbocker9889]

Excellent presentation. Once you know the SD and the variation, you can actually covert these numbers into a standard normal distribution. Then, using a z score, you can see the probable outcomes. The model is using variation (volitility and risk) as a measure of probable outcomes.

[@kellymutsvairo1340]

Next week exams here I come 😅 Thank you !!!!!

[@safeekarzai350]

You are a real G!

[@kevinbracker]

It depends on how precise your standard normal table is and how precise you want your answer. I used Excel to generate a standard normal table that is pretty precise (from -1.00 to 1.00 every hundredth, from from 2.00 to 3.00 every two-hundreths, and five hundredths beyond there) to use for my class, so the students are not expected to interpolate. In practice, you would like use a spreadsheet or canned program that would generate exact values.

[@JPearson1987]

Thanks. Been reading a few books on the related so good to see it can be broken down to be less daunting.

[@sudhirpatil3434]

Nicely explained!

[@bongsmzayiya2646]

you are a star indeed. God bless you more

[@kevinbracker]

First, I'd be cautious taking the BS price as the "true value" as it is going to depend on your volatility input. If you're value is $3 and the market is $2, it means you feel the stock is going to be more volatile over the life of the contract than the market does. Another problem is dividends. You can adjust the model for dividends, but I don't here. If you have a high dividend yield stock that pays dividends before the option expires, that could make the option appear undervalued.

[@brightsidenewsteam]

Thank you Mr. Bracker! You explained everything really well. Good work!

[@svenskfox]

Very helpful. I have an exam coming up on the BSOPM and this definitely helped me practice. Thanks!

[@noeltangara2124]

Thank you so much sir

[@kevinbracker]

The risk-free rate can come from the T-Bill or LIBOR rate for that time period. For example, if you were working with an option with 1 month to maturity, you would want a 30-day rate. If you were looking at an option with 3 months, you'd want the 3-month rate. Given the current interest rate environment, these are all going to be close to zero, but the risk-free rate will be more important under normal interest rate levels

[@karim1268]

Great job explaning a very complex subject!

[@kaiserjahan5952]

Awesome sir...

[@parthbhanushali9382]

I really like the video . 😄 a very simple style of teaching and teaching students . Thank you for the video

[@SFB-33]

you should also explain which are the assumptions under the black and scholes model like the lognormal property of stock prices

[@walterpinto879]

Very Clear Explanation! Thank you for the videos, and continue to this videos. Thanks You explain very well, clear and slowly! Great. Thanks

[@MrTapesh123]

Hey, THank you so much for explaining this in a clear manner. Really helps... Please post more videos I love your teaching style

[@elenaragazzi1234]

Thank you for your video and clear explaination, but I have a question. How can I calculate N(d) using a standard normal table? I mean I understood how to find N(d) value using the table you created, but how to calculate it using just the standard normal table? Thank you so much to anyone who will solve my doubt!

[@kevinbracker]

Elena -- The table I printed is a standard normal table (just with more detail). Some of them just give the positive values (the base is 0.5000), so you would subtract for a negative value and add for a positive value. Hopefully that answers the question, but if not, please clarify and I can try again.

[@NikhilSingh-qr4wk]

Your video is fantastic, makes it easy to understand options pricing. Thanks a lot

[@yellowseedkeke]

Thank you, love from 🇮🇳

[@konradkuhne3126]

Incredible explanation. Thank you very much! Finance student from Thunder Bay, Ontario.

[@juanarias701]

I ended up understanding a lot more with video, thanks for posting Kevin.

[@briananyanwu101]

Excellent walk through

[@derekdj6790]

This has done me well, thank you very much.

[@lovecoley1765]

THANK YOU SOOOOOO MUCH, you saved my homework tonight.......!!!!

[@vlKenzo]

+FRUIT Til FIVE What class is this for? I am a senior in high school, and this application of calculus is very interesting to me.

[@lovecoley1765]

+vlKenzo Investment Analysis 👍🏽

[@DrBre-zk7ge]

Wow exceptional video, really really well explained and at a very at a perfect speed. Thank you

[@yashjain4417]

Thanks alot 😄

[@gusinthecloud]

Excellent Teacher!!

[@yopieputra3783]

I hope you are my lecturer, thanks for the video!

[@casalonijain24]

Amazing explanation. I was struggling to understand BSM. But it cleared all my doubts. Thanks. 🙂

[@prajwalraotalgar3322]

Watching it after 13 year of publishing😊

[@fifihei]

Excellent example for exam review. Thanks!

[@MahadHadadi]

10 minutes to my End term Exam, and here i am

[@kevinbracker]

Hope it helped. :)

[@MahadHadadi]

@@kevinbracker absolutely 🙏💙

[@manojkaliaperumal968]

Hey Kevin, thanks a lot for this video. I just have a question :- so what does the final call option price tell us? It’s over priced and there’s a probability that it goes back to the intrinsic value ? Which is 2$?

[@kevinbracker]

It gives you a ballpark estimate of what the option is worth...not an exact value. One of the reasons it isn't exact is it is based on what the volatility SHOULD be between now and the option's expiration (which means you need a crystal ball or time travel 🤣). There are also assumptions about the return distributions, etc. which are approximately valid but don't account for unexpected news coming up (earnings between now and expiration or other news events). It's a good pricing model (better than many models in finance), but as with all models your answer should be not be taken as "correct", but as an approximation.

[@manojkaliaperumal968]

@@kevinbracker gotcha, so we can use the same pricing for options writing I’m guessing? So if the price feels like way above the fair value then it’s decent probability to write that particular strike price I’m guessing? ( of course other parameters also has to be checked)

[@parthbhanushali9382]

Amazing video loved the explanation waiting for more such videos !

[@abbynyamima8460]

Thank you soo much

[@dkRun21]

Just a technical point to add. That risk free rate is not just any rate, one must ensure that it is the continuous risk free rate of interest. So if an effective risk free rate is given this means that it has to be converted so that an accurate figure is used

[@akhilesh7851]

Thank you so much Finally understood!