Black scholes-merton is toooo much!!! can some one who follows this one break up the parts and make some sense for me Thx!!!
I just memoreised it… don’t know what to say. It’s horrible and it took me about 2 hours to do.
Before that - are we or are we not in agreement with Schweser that we don’t need to memorize the formula, just the assumptions of the model??
There is nothing you can do with that model. NOTHING. DO NOT MEMORIZE IT.
Just know how changes in the greeks affect the model. The questions should be quantitative in nature
Qualitative I meant
Good. Or else I’d be in trouble. Options is the one thing I have down. At least today.
can some break the qualitative part ???
- Can only be used on European options 2. The is an extention of the binomial model, it converges to a continuous time model. 3. assumptions (a) underlying assets are log distributed; (b) risk free int rate and underlying volatility known and constant; © no cash flows or transaction costs 4. like above poster… know the greeks and how it impacts model. vega (volatility) is the modest important variable.
^^ vega is important, but so are the other greeks… especially delta and gamma. I doubt they would cover Theta or Rho on the exam.