option pricing model

Definition of "option pricing model"
  1. A mathematical approach for determining the theoretical value of an option based on variables such as underlying asset price, strike price, time until expiration, variability of the underlying asset, and risk-free interest rate
How to use "option pricing model" in a sentence
  1. An option pricing model was used to predict the worth of the stock options.
  2. The financial analyst used an option pricing model to assess the potential return on investment.
  3. To get an understanding of the security's worth, the broker applied an option pricing model.

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