Black-Scholes option pricing model: Difference between revisions

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The source of a ''lot'' of trouble, especially when used, as it habitually is, to manage risk in [[complex system]]s. The owners of [[Long-Term Capital Management]], and for that matter, their counterparties and much of the financial system discovered this to their surprise and cost during the Russian crisis of 1998. It is a lesson that folks are yet to learn.
{{a|glossary|{{image|God playing dice|png|“''God Does Not Play Dice''.” {{vsr|1998}}}}}}A technique for managing [[Complicated system|complicated risk]] which is the source of a ''lot'' of trouble, especially when used, as it habitually is, to manage [[complex system|''complex'']] risks.  
 
The owners of [[Long-Term Capital Management]], and for that matter, their counterparties and much of the financial system discovered this to their surprise and cost during the Russian crisis of 1998, and again in the Lehman collapse and its aftermath in 2008. It is a lesson that folks are yet to learn.
 
God does not play dice. But if she did, whom would she play against?


{{sa}}
{{sa}}
*[[systems analysis]]
*[[LTCM]]
*[[LTCM]]
*{{br|Models.Behaving.Badly}}
*{{br|Models.Behaving.Badly}}
*{{br|When Genius Failed}}
*{{br|When Genius Failed}}
*{{br|Inventing Money}}
*{{br|Inventing Money}}

Latest revision as of 12:46, 30 September 2022

The Jolly Contrarian’s Glossary
The snippy guide to financial services lingo.™
File:God playing dice.png
“God Does Not Play Dice.” (von Sachsen-Rampton, 1998)
Index — Click the ᐅ to expand:
Glossary

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A technique for managing complicated risk which is the source of a lot of trouble, especially when used, as it habitually is, to manage complex risks.

The owners of Long-Term Capital Management, and for that matter, their counterparties and much of the financial system discovered this to their surprise and cost during the Russian crisis of 1998, and again in the Lehman collapse and its aftermath in 2008. It is a lesson that folks are yet to learn.

God does not play dice. But if she did, whom would she play against?

See also

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