Simple option pricing models can be evaluated by diffusing the payoff at expiration backwards through time. The 1D PDE governing the payoff evolution is (under...
In Black-Scholes, N(d2) is the probability that the option will be struck in the risk-neutral world. The Merton model for credit risk uses the Black-Scholes...
BlackScholes model The Black-Scholes model of the market for an equity makes the following explicit assumptions: It is possible to borrow and lend cash at...
demonstrations.wolfram.com The Wolfram Demonstrations Project contains thousands of free interactive visualizations, with new entries added daily. There are two main types of options that occur...