3. An Overview of Option Pricing Methods

This chapter provides an overview of common option pricing methods. It primarily serves as background to show how the spreadsheet or “visual” method fits into the mix. The chapter also provides the Excel code for the Black-Scholes formula used later in model building.

Some of the material in this chapter is theoretical and is not used in later parts of the book. The more technical sections are only to give readers who are already familiar with option pricing methods a frame of reference. Please don’t worry if some of this doesn’t sink in. However, if it sounds interesting to you and you would like more information, there are many good resources available. For general options information, see The Options ...

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