Excel tool revolutionizes understanding of option pricing in modern finance.
The article presents a way to teach the Black-Scholes option pricing model using Excel. The model includes dynamic graphs showing option value, intrinsic value, and time value. Users can adjust volatility, time to maturity, and risk-free rate to see how these factors affect option prices. The graphs also illustrate how option prices change with movements in the underlying asset price. This method helps students visualize how different factors impact option prices.