What is Black Scholes?

The Black-Scholes model is a mathematical model used for pricing European-style options. It estimates the variation over time of financial instruments such as stocks, that can, with certain assumptions, be used to determine the price of a European call or put option. The model assumes constant volatility over the option's life and that the underlying asset follows a log-normal distribution. It is widely used in finance, although its assumptions are often simplified and may not accurately reflect real-world market conditions.