@Kyyp3r
I thought the third guy was going to be called Formula
@CortesVics
I like the "rough speaking", it made things more clear to me.
@MarvelGirl100
Thank you for Posting. You have done what many teachers do not do today. That of breaking the down the equation. Describing the outcome of the variable in a clear way. Your speaking voice is excellent and engages the listener. Do you know how hard it is to find teachers that want to teach because they are passionate teaching. You have unraveled our FATHER OF PRICING Option"s Formula and have done him a great service.
@narleira
A phenomenal lesson I’ve been watching this lesson overtime in my studies, and as I revisited, Always understand a little more. I have immense respect for Khan Academy and the work you guys do, really help me a lot. My humble contribution to this, 's in time 9:09, when you said that an increase in sigma (historical volatility), makes D1 go up and D2 down in value, which it's not quite accurate, I'm certain it's because you speaking in rough terms to be easier to understand. As my understanding goes, an increase in volatility (sigma) makes BOTH D1 and D2 increase in value, but the ratio of this increase in D1 is greater. Which makes the difference, between them, and their fore between N(D1) and N(D2) greater. And that's why an increase in volatility alone makes the premium of a call option, as the example, have an increase in value. More specifically Extrinsic value. The outcome in the premium it's the same, but I humbly believe that's this's more the case in that situation. Sorry for the bad English, I'm a foreigner and I love the videos. You guys should do a deep math course on Black and Scholes, I'm certain it's gonna be great! Best Wishes!
@MolecularArchitect
Honestly, I was about to click away, but then I stuck it out. Sal's just a genius at teaching.
@ttijp153
my prof. never tried to break down this BS model in class. this is simply the best explanation of one of the most complicated formulas in finance world. Thank you so much Professor Khan. You are the best!
@terryakiyall
Honorable mention to Louis Bachelier who did the preliminary research that led to the Black Scholes Formula.
@frederickfarias9515
I did this in college, 43 years ago with select stocks in S&P 500. The problem with it is that the distribution of risk is not representative to reality, it’s only an attempt or approximation. For example a standard dev. gives equal weights to up and downside.
@aprilzhao6471
Thank you so much! I'm preparing for my CFA level 2 and was stuck on the black-sholes model. You saved me so much time of head-scratching!
@horforn686
these three men have caused so much pain
@TurtleSlayer94
Great video! I'm studying for an exam and your videos really are a lot clearer and easier to remember than the rambling of my professor or the 800 pages of examples in our books. Life saver!
@theboredprogrammer1114
This video makes me take my subject Financial Engineering seriously. I mean, I just find it interesting on how this mumbo-jumbo of variables makes so much sense in going to more advanced financial modelling techniques.
@danchatka8613
Sal Khan is a national treasure.
@sayalipatil7336
Thank you so much for this. I have immense respect for Khan Academy and the work you guys do. It's quality and life-changing.
@reneefongg
Hands off my uni lecturer is the worst, this simple 10 minutes saved my life
@verdaderoamor980
This is by far the easiest way to explain the B&S formula ! Thank you so much for this instructive video !
@elizazhang4093
Thank you soooo much!! you explain it very clear and very easy to understand. Even if I do not have a strong math background, I can still understand it. which is very helpful for my CMA study. I was trying a long time to find a good explanation online until I found you !!
@OmegaCraftable
I've never done any finance or economics, nor seen any previous videos on the subject, I just watched it because it sounded interesting :p
@marisa4942
Your video saved my life 😭 Thank you thank you!
@oscarkr9061