I have a couple of questions related to the Black Scholes formula and its value of our options, as this has been a topic I've been finding hard to understand and get my head around I was hoping someone could provide a basic explanation to these questions.
1) From my understanding of the Black Scholes formula and what I have read and try to absorb from videos, is a formula only for European call options which have a set conversion/exercise date while American call options can be exercised at any time within the expiry. Given our options can be exercised at any time (this is my current understanding, please correct me if I am wrong on this) does this not make our options "American"? which the Black Scholes formula isn't normally applied to? Sorry for my ignorance but this is how I have interpreted the information on the Black Scholes formula.
2) What does the $1.05/$1.09 (the quoted Black Shocles value on our options) Black Scholes value mean? is it better for the Black Scholes value to be higher or lower than this and what is the typical/average value and range on these? I have seen our Black Scholes value being talked about a lot which I can only assume is good?
As I am someone who has never dealt with options before and only have an adequate, basic understanding of what options are, I have tried to find this information but get stuck with needing to know how the whole formula works. It's probably what I have to do which I have been trying but is a bit of a mindfuck for me haha.
Any responses, even if it is just pointing me in the right direction to find this information out would be greatly appreciated.
Regards Gorey29
RAC Price at posting:
$3.07 Sentiment: Buy Disclosure: Held
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