A Numerical Approximation on Black-Scholes Equation of Option Pricing

This paper considered the notion of European option which is geared towards solving analytical and numerical solutions. In particular, we examined Black-Scholes closed form solution modified (MBS) partial differential equation using Crank-Nicolson finite difference method. These equations were approximated to obtain Call Put prices. The explicit price both options found accordingly. solutions compared prices formula. More so, comparisons other parameters discussed for purpose investment plans. computational results shows: increase in stock volatility increases value options, when initial equal its strike values call higher than put option. informs investor about behavior decision making. Finally, all simulation presented graphically MATLAB.