http://gen.lib.rus.ec/book/index.php?md5=4A5FD368C7902194D403D86CC078506E

Good morning. What's exactly the project you want to accomplish? Can you be more specific?

Specifically for implementation in the stock exchange financial market.

Dear Kamran,

You can use the BS formula for the pricing of options, for both listed (exchange traded) and over the counter options. The BS model can be used as well to estimate the implied volatility of options given their quoted prices in the financial markets.

It can also be used to estimate the required hedging using delta hedging techniques, etc. However, for emerging countries, you can apply the BS model keeping in mind that the input variable can witness drastic changes in their values, particularly volatility.

Prof. Dr. Mazin A. M. Al Janabi

Full Professor of Finance & Banking and Financial Engineering

EGADE Business School, Tecnologico de Monterrey,

Santa Fe Campus, Mexico City, Mexico.

Thank you, Sir.

Dear Dr. Zakaria,

If your question is meant to ask whether the Black-Scholes model is an Equilibrium, Model of Pricing in the Options Market the answer is it is not simply because there is no mention of demand or supply built into it. However, Ku & Polemarchakis (1990). Journal of Mathematical Economics, has shown that roughly because the option writers gain is the option holders loss, of course with a lower bound, hence as proved by Radner (1972) in an abstract sense there will be an equilibrium in the derivatives market with the money flowing from the share market upon which the derivatives have been written. We have shown that when you integrate the two markets using Arrow-Debreu structure of money and states, you can arrive at equilibrium in the quantitative demand supply sense. Mallick (1993,2014). This however requires String Theory derivatives if you ask the Econophysics question, how will these markets be systems integrated. However, this is no criticism but just an extension to a new field of the Black-Scholes framework. For experimental and empirical proof see Mallick, Hamburger &

Mallick (2016) of the String Theory Econophysics. Sorry if I have given you unwanted lecture.

S.K.Mallick

for S.K.Mallick, S.Raychaudhury, S.Mallick and others,

IAS (USA) & RHMHM School

The BS model is an equilibrium model, under certain restrictions and hypotheses. It is found to be valid under those circumstances. Of course, in the financial markets, it's very rare to find equilibrium and maybe other models are more appropriate to price derivatives. Maybe, closed form solution models are more appropriate, especially for American-style derivatives.

Wikipedia

Thank you all for giving me the guidance but I saw in most of the manuscripts are without proper implementation of the BS model in the financial market specifically stock exchange. Like Pakistan stock exchange etc.

Please give reference to any article to find the proper implementation of the BS model.

Following