Black Scholes

112812_2017_Understandi7

Black Scholes Model Probabilities. The difference between N(d1) and N(d2)

1 Comment

4 mins read

On the other hand N(d1) will always be greater than N(d2) because in linking it with the contingent receipt of stock in the Black Scholes equation, N(d1) must not only account for the probability of exercise as given by N(d2) but must also account for the fact that exercise or rather receipt of stock on exercise is dependent on future value