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QuoteIn the Black-Scholes equation, the symbols represent these variables: σ = volatility of returns of the underlying asset/commodity; S = its spot (current) price; δ = rate of change; V = price of financial derivative; r = risk-free interest rate; t = time. Photograph: Asif Hassan/AFP/Getty Images
It was the holy grail of investors. The Black-Scholes equation (http://en.wikipedia.org/wiki/Black%E2%80%93Scholes), brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run. It was like buying or selling a bet on a horse, halfway through the race. It opened up a new world of ever more complex investments, blossoming into a gigantic global industry. But when the sub-prime mortgage market turned sour, the darling of the financial markets became the Black Hole equation, sucking money out of the universe in an unending stream.
Link: https://12degreesoffreedom.blogspot.com/2012/02/midas-formula.html (https://12degreesoffreedom.blogspot.com/2012/02/midas-formula.html)
A documentary on it from the BBC is at: https://vimeo.com/244903345.