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Options-Trading-Black-Scholes-Derivative-Model-Python

Explanation of the Black Sholes Equation with Examples in Python

Table of Contents

  1. Introduction
  2. Features
  3. Requirements
  4. Installation
  5. Usage
  6. Validation
  7. Contributing
  8. Contact Information

Introduction

In the current expansive realm of global financial markets, the Black and Scholes model retains significant relevance. It is definitely one of my favorite financial models and mastering Black and Scholes provides finance professionals with unique insights to the world of volatility, trading and even macroeconomic dynamics. Employing its intricate mathematical framework, the Black-Scholes model offers unparalleled insights into the nuanced dynamics of option pricing amidst the complex world of modern financial markets.

Features

  • Black and Scholes Model: Utilizing SciPy and OpenBB for building a basic Black and Scholes model and retreiving real world derivatives trading data.
  • Price Validation: Validating option price results to ensure accuracy of our model's calculations.
  • Versatile Model: Useful base model that can be applied to different underlying assets and financial applications.

Requirements

  • Python 3.x
  • SciPy
  • OpenBB

Installation

!pip install openbb scipy

Usage

The complete guide in the blog walks you through each step of the Black and Scholes model, including:

  • Importing necessary libraries: Import necessary libraries for the Python model.
  • Creating variables for input to Black and Scholes formula: Create variables used in the Black and Scholes formula.
  • Calculation of Cumulative distribution functions: Calculate the complex mathematical functions that .
  • Calculations of Call and Put option prices: Obtain the calculated prices for call and put options.

Validation

  • Checking Option Prices in the Market: OpenBB is used inside the Python script to retreive real world option price data and validate the results we have calculated locally using Python.

Contributing

We welcome contributions to this project. To contribute:

  1. Fork the project.
  2. Create your feature branch (git checkout -b feature/AmazingFeature).
  3. Commit your changes (git commit -m 'Add some AmazingFeature').
  4. Push to the branch (git push origin feature/AmazingFeature).
  5. Open a Pull Request.

License: MIT

Contact Information

For any questions or inquiries, please contact support@pyfi.com - Subject: Github Repo Q, Options-Trading-Black-Scholes-Derivative-Model-Python. For a full article walkthrough please visit > https://www.pyfi.com/blog/options-trading-black-scholes-derivative-model-python < and learn more about PyFi's award winning Python for Finance courses which have been trusted by the top financial institutions in the United States and Canada multiple years running here >> https://www.pyfi.com <<