Yes you're right Crashy LTCM developed that method or more specifically implemented it, as it was developed by Black, Merton and Scholes.
However before you break out the champagne perhaps you should research the history of LTCM. Incidently they also ran a massive number of computer simulations to validate their system. Worked fine on the computer.
To see why it didn't work get hold of a copy of "When Genius Failed" by Lowenstein.
