Louis Bachelier: The Father of Modern Option Pricing Theory
- 1 April 1991
- journal article
- content articles-in-economics
- Published by Taylor & Francis in The Journal of Economic Education
- Vol. 22 (2) , 165-171
- https://doi.org/10.1080/00220485.1991.10844704
Abstract
Prior to the publication of the Black-Scholes model in 1973, the quest for a formula that would describe option prices reflected one of the elusive goals in financial economics. Many of the insights and techniques used to solve the option-pricing problem were anticipated at the beginning of the twentieth century by Louis Bachelier. Bachelier's innovations included the first graphical representation of option pricing and a mathematical description of stock prices utilizing Brownian motion.Keywords
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