Explanation:

Black Scholes is the main methodology for calculating the price of derivative options on stocks. It determines the price of a derivative product by considering five input variables: the strike price offered by the option, the current stock price, the time to expiration of the option, the risk-free rate and volatility. 

Black Scholesis used to calculate prices for call and put options. Call options offer an investment product for investors seeking to benefit from a rising stock price. Buying a call option gives an investor the right to buy a stock at a specified strike price. Buying a put option gives an investor the right to sell a stock when they estimate a price is falling.