Evaluating a Put Option Using BlackScholes TheoryConsider the task of pricing at time 0 a European put option (i.e. one that cannot be exercised early) on a nondividendpaying stock that matures 5 periods in the future. Broadly speaking, the term may refer to a similar PDE that can be derived for a variety of options, or more generally, derivatives.
The BlackScholes formula (also called BlackScholesMerton) was the first widely used model for option pricing. Since the original papers of Black and Scholes (1973) andMerton pricnig, there has been a wealth of practical and theoretical applications. In thischapter we will discuss ways of calculating the price of an option in the setting discussed in theseoriginal papers. The discussion is not complete, it needs to be supplemented by one of the standardtextbooks, like Hull (1993).SetupLet us start by reviewing This page explains the BlackScholes formulas for d1, d2, call option price, put option price, and formulas for the most common option Greeks (delta, gamma, theta, vega, and rho).If you want to use the BlackScholes formulas in Excel and create an option pricing a put option black scholes equations spreadsheet, see detailed guide here:BlackScholes Excel Formulas and How to Create a Simple Option Pricing SpreadsheetAlternatively, you can get a readymade BlackScholes Excel calculator from Macroption, which also includes additional features like scenario simulations and charts.
Here you can get a readymade BlackScholes Excel calculator with charts and additional features such as parameter calculations and simulations. BlackScholes in Excel: The Big PictureIf you are not familiar aa the BlackScholes model, its parameters, and (at least the logic of) the formulas, you may first want to see this page.Below I will show you how to apply the BlackScholes formulas in Excel and how to put them all together in a simple option pricing spreadsheet. Blaco pricing a partic.
Pricing a put option black scholes equations

