Black-Scholes formula

Around the formula...

In a now famous article, Fisher Black and Myron Scholes (1972) presented a model for pricing European-style options that is now very widely used . For a call option, the Black & Scholes formula is as follows :

with :
 
where :

V = current price of the underlying asset
N(d) is a cumulative standard normal distribution (average 0, standard deviation 1)
K = option's strike price 
e = exponential function = 2,71828
rF = continual annual risk-free rate
s = instantaneous standard deviation of the return on the underlying asset
t = time remaining until maturity (in years)
and ln = Naperian logarithm