Black-Scholes Formula
The premium of a call option is calculated using the Black-Scholes formula:
C = S * N(d1) - K * e^(-rT) * N(d2)
Where:
- S: Current stock price
- K: Strike price
- T: Time to maturity
- r: Risk-free rate
- σ: Volatility
- N(d1) and N(d2): Cumulative distribution functions