The Skinny On Options Math

Black-Scholes and Log-Normal Distributions

The Skinny On Options Math

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

The Black-Scholes pricing model is one of the most popular models used to calculate the price of an option. Similarly, a Log-Normal Distribution is used to predict where the price of an option might go since it can never go below zero. These are two very important mathematical models that impact our trading.

Today, Tom "TP" Preston and Tony Battista are joined by Jacob Perlman as they discuss these models as well as others. Jacob explains how we use all of these models when trading options and how you it's easy to get confused when discussing them. The guys make it very clear what each is actually saying so make sure you check out the segment to get a deeper understanding of how option models work!

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