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As the article states, this is more about getting two people to agree on the price of illiquid derivatives So you have your counterparty on the phone or in gro

• frausto 7y ago
  That's a good way to put it. As my economics professors liked to point out, Black-Scholes was a self-fulfilling prophecy in that the success of the model was determined by the fact that everyone was using it (or some variation of it) to price derivatives. If it had never been published would it still have been as accurate? Who knows. When you dive deep it's easy to think of economics in terms of math and forget the fact that, unlike physics, it is a social field and there is no right and wrong aside from what people agree on.
  • alfiedotwtf 7y ago
    > If it had never been published would it still have been as accurate? Who knows. I think if prices didn’t follow the model, there will be arbitrage opportunities either in the options or the underlying.