Outrageously Funny Search Suggestion Engine :: Puts Math

👉 The put option pricing formula, derived from the Black-Scholes model, is a mathematical equation that calculates the theoretical price of a put option based on several key inputs: the current stock price, the strike price, time to expiration, risk-free interest rate, and volatility of the underlying asset. The formula is put(S, K, T, r, σ) = Ke^(-rT)
N(-d2) - S
N(-d1), where N is the cumulative distribution function of the standard normal distribution, and d1 and d2 are calculated using the formula d1 = (ln(S/K) + (r + (σ^2)/2)
T) / (σ
sqrt(T)), and d2 = d1 - σ
sqrt(T). Put options provide the holder the right, but not the obligation, to sell the underlying asset at the strike price before expiration, making their pricing heavily dependent on factors like volatility and time decay. The put formula quantifies this relationship, enabling traders to estimate the fair value of a put option based on these variables.

puts math