An equation told traders exactly what a financial bet on the future should cost
Before 1973, options contracts were priced mostly by gut feel, with no agreed way to say what a bet on a future stock price was actually worth. Fischer Black and Myron Scholes, building on work with Robert Merton, derived a formula that calculated a fair price from just five inputs, transforming options trading from a niche gamble into a mainstream, mathematically grounded market almost overnight.