all gas no brakes
all preparation no perspiration
all filler no killer
all potatoes no steak
all get-up no go
all wind-up no pitch
all foreplay no climax
all itch no scratch
all process no result
all style no taste
all crisp no flavor
all form no substance
all surface no weight
all order no meaning
all spark no flame
all sensing no feeling
all longing no loving
all tension no release

Why do we need an options pricing model?

In 1973, Black and Scholes published The Pricing of Options and Corporate Liabilities, inventing the Black-Scholes Options Pricing Model. One critical element of their model is that the value of an option with the price \(S\), strike \(K\), and maturity \(T\), is dependent on the variance of the underlying stock price.

This makes intuitive sense, the value of a call option is, at some level, a probability-weighted value, based on all possible futures values of the underlying stock price, minus the strike. If the price of the stock is highly volatile, it follows that there is a higher probability that the stock price will end up above the strike price, and therefore valuable to the owner of the option.