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 Dec 2019

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More volatile underlying assets will translate to higher options premiums, because with volatility there is a greater probability that the options will end up inthemoney at expiration.
That's interesting


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The option is European and can only be exercised at expiration.No dividends are paid out during the life of the option.Markets are efficient (i.e., market movements cannot be predicted).There are no transaction costs in buying the option.The riskfree rate and volatility of the underlying are known and constant.The returns on the underlying are normally distributed.
Some of the assumptions underlying the BlackScholes model. Do these limit its realism and predictive power?
