A Beginner’s Guide to the Black-Scholes Option Pricing Formula (Part 2)

Continued from part 1. Expected Value Suppose there’s a competition I can enter for free where I have a 50% chance of winning $1,000,000, and a 50% chance of receiving nothing. Obviously I’m going to enter as many times as possible. Suppose I enter 1,000 times: what will I expect to win? On average I’m … Continue reading A Beginner’s Guide to the Black-Scholes Option Pricing Formula (Part 2)