# Black–Scholes Model

*Derivatives & Options — Finicade finance glossary*

The Nobel-prize-winning formula that prices an option from five ingredients: today's price, the strike, time to expiry, interest rates and volatility. It turned options from guesswork into a science and still anchors how desks quote and hedge them today.

**Also known as:** black scholes, black-scholes-merton, bsm

**Related terms:** [Option](https://finicade.com/glossary/option), [Implied Volatility](https://finicade.com/glossary/implied-volatility), [The Greeks](https://finicade.com/glossary/the-greeks), [Risk-Neutral Pricing](https://finicade.com/glossary/risk-neutral-pricing)

**Taught in:** Hull Street — Black–Scholes at a Glance

Source: https://finicade.com/glossary/black-scholes