option pricing model

option pricing model
option pricing model option pricing model model

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option pricing model UK US noun [C]
FINANCE, STOCK MARKET a way of calculating whether the price of an option (= the right to buy shares, etc. at a particular price) is fair: »

The option pricing model takes various risk factors into account.


Financial and business terms. 2012.

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Look at other dictionaries:

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  • Black-Scholes option pricing model — A model for pricing call options based on arbitrage arguments. Uses the stock price, the exercise price, the risk free interest rate, the time to expiration, and the expected standard deviation of the stock return. Developed by Fischer Black and… …   Financial and business terms

  • two-state option pricing model — A pricing equation allowing an underlying asset to assume only two possible (discrete) values in the next time period for each value it can take on in the preceding time period. Also called the binomial option pricing model. Bloomberg Financial… …   Financial and business terms

  • binomial option pricing model — See binomial model. Practical Law Dictionary. Glossary of UK, US and international legal terms. www.practicallaw.com. 2010 …   Law dictionary

  • Binomial option pricing model — An option pricing model in which the underlying asset can take on only two possible, discrete values in the next time period for each value that it can take on in the preceding time period. The New York Times Financial Glossary …   Financial and business terms

  • binomial option pricing model — An option pricing model in which the underlying asset can assume one of only two possible, discrete values in the next time period for each value that it can take on in the preceding time period. Bloomberg Financial Dictionary …   Financial and business terms

  • pricing model — ➔ model * * * pricing model UK US noun [C] ► COMMERCE, MARKETING a method for deciding what prices to charge for a company s products or services: »The change in the group s pricing model for its directory service saw it shift from charging… …   Financial and business terms

  • Black-Scholes option-pricing model — A model for pricing call options based on arbitrage arguments that uses the stock price, the exercise price, the risk free interest rate, the time to expiration, and the standard deviation of the stock return. The New York Times Financial… …   Financial and business terms

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