The Black Scholes option model is a simple formula which can be used for valuing European Options. The Black Scholes model cannot be used for valuing other exotic types of options such as American Options or Asian Options as it cannot incorporate exercise features or any path dependencies (such as the knock in/out features of Barrier Options). The primary advantages of the Black Scholes model are its speed and accuracy in valuing simple options.
The Black Scholes model has five main inputs – Spot Price, Strike Price, Time to Maturity, Interest Rate and Volatility. For more details on these see Black Scholes Inputs.
Derivatives ONE features a free Black Scholes pricing model for valuing European options on Stocks, Currencies, Commodities and Futures
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