Black-Scholes are also referred to as Black-Scholes-Merton model used in financial market. It is one of the method used to find the option pricing. The formula given here is used to calculate the price of European put and call options where the price remains constant.

C = Theoretical call premium

S = Current stock price

t = time

K = option striking price

r = risk free interest rate

N = Cumulative standard normal distribution

e = exponential term (2.7183)

d_{1} = ( ln(S/K) + (r + (s^{2}/2))t ) / s√t

d_{2} = d_{1} - s√t

s = Standard deviation of stock returns

It was introduced to find the premium of an option in the year 1973. This is the most well known option pricing method in the world.