Graphs of the Black and Scholes Model:


This following graphs show the relationship between a call's premium and the underlying stock's price.

The first graph identifies the Intrinsic Value, Speculative Value, Maximum Value, and the Actual premium for a call.

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The following 5 graphs show the impact of deminishing time remaining on a call with:
S = $48
E = $50
r = 6%
sigma = 40%

Graph # 1, t = 3 months
Graph # 2, t = 2 months
Graph # 3, t = 1 month
Graph # 4, t = .5 months
Graph # 5, t = .25 months

Graph #1

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Graph #2

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Graph #3

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Graph #4

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Graph #5

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Graphs # 6 - 9, show the effects of a changing Sigma on the relationship between Call premium and Security Price

S = $48
E = $50
r = 6%
sigma = 40%

Graph # 6, sigma = 80%
Graph # 7, sigma = 40%
Graph # 8, sigma = 20%
Graph # 9, sigma = 10%

Graph #6

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Graph #7

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Graph #8

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Graph #9

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