Analysis of Stock Options on Meta Platforms Inc Using the Black-Scholes Method

Abstract

A stock option is a financial instrument that allows the holder to buy or sell a company's stock at a fixed price (strike price) over a set period of time. Stock options are classified into two types: call and put options. A call option grants the holder the right to purchase shares, whereas a put option grants the right to sell shares. However, the holder is under no obligation to exercise the right. Many methods have been developed by professionals to help investors or shareholders analyze the share price of a company. One method is the Black Scholes Model developed by Fischer Black and Myron Scholes in 1973. This model provides a formula for calculating the theoretical value of call and put options on stocks. This research provides valuable insights for investors, analysts, and other stockholders in making investment decisions. This study aims to identify and analyze the call price and put price of the META Platform Inc using the Black-Scholes Merton method based on stock data on February 12, 2024 to May 10, 2024 or in a 3-month data interval. Data obtained from Yahoo Finance website. The results show that at the underlying price of 476.20, the call option price is 6.78982241, while the put option price is 0.286881255. The higher call option price compared to the put option price indicates that the market is more optimistic towards Meta Platforms, Inc.'s share price rising from 476.20. This may also reflect market volatility and more bullish investor sentiment