Black Scholes Merton

Black Scholes Merton model is a modified form of the Black Scholes model. All assumptions of Black Scholes model are applicable to Black Scholes Merton except for the one with a constant dividend yield throughout the life of the options.

Black-Scholes Merton formula for call options is as follows:

Where,

r  = Risk-free Rate

t = Expiration Date

X = Strike Price of the option

S = Price of the Stock

σ= Standard deviation