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Was BS actually of any practical use? It just seems to be a fantasy like most maths in economics.
by eggdaft 3y ago
Was BS actually of any practical use? It just seems to be a fantasy like most maths in economics.
- lordnacho 3y agoYes, it has some use. First of all, if you don't have a common model, it becomes impossible to talk about vol. So even if everyone uses their own model, they convert back into BS vol to talk about vol. Second, all models are wrong, but some models are useful. BS is a good starting point because it captures something that is relevant in option pricing, namely that uncertainty matters.