The article explains how financial derivatives like stock options are priced using mathematical models. It discusses different models for predicting stock prices and how they are used to calculate option prices. The main idea is that options are priced without any opportunity for risk-free profit. The Black-Scholes and Merton model is introduced as a way to value options. Most derivatives need to be priced using numerical methods like lattice models, Monte Carlo simulation, or finite difference methods. The article also suggests further reading for those interested in learning more about this topic.