Consider the following equation: C = S × N

Question

Consider the following equation: C = S × N  - PV(K)× N  In this equation,the term S represents
A) the current price of the stock. 
B) the stock price at expiration. 
C) the annual volatility of the stock. 
D) the strike price for the option.

Quizplus · Accepted Answer

S represents the annual standard deviation or volatility of the stock's returns. It is used in the calculation of the Black-Scholes model for option pricing.