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Call Premium

Returns the value of a European call option as determined by the Black-Scholes formula.

Syntax  (Values in boldface are required; others are optional)

(UnadjustedPrice, StrikePrice, Years, Volatility, RiskfreeRate, DividendYield)
  • UndajustedPrice:  The present price of the underlying security (i.e., the stock price), before adjusting for future dividends.
  • StrikePrice:  Also known as "exercise price", the price at which the underlying security may be bought or sold upon exercise of the option.
  • Years:  The time in years until the option expires.  For example, for an option that expires in one month you may enter "1/12" or ".083".  For an option that expires in forty-five days, you may enter "45/365".
  • Volatility:  The annualized estimated volatility of the underlying security, expressed as a percentage greater than zero.
  • RiskfreeRate:  The annual risk-free rate of interest which corresponds to a time period roughly equal to the remaining life of the option, expressed in continuous compounding terms.  If omitted, zero is assumed.
  • DividendYield:  The annualized dividend yield of the underlying security, expressed in continuous compounding terms.  If omitted, zero is assumed.





  • American call options generally have the same value as European call options.
  • A good estimate for the riskfree interest rate is the current yield on US Treasury Bills having approximately the same duration as the remaining life of the option.
  • To estimate dividend yield, multiply the most recent quarterly dividend by four, then divide it by the stock price.
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