About this question
Medium · Number Theory & Algorithms · Quant Trader interview question · black-scholes, implied-volatility, binary-search, monotonic-function, option-pricing
You are pricing European call options on a stock using the Black-Scholes model. You observe the market price of a particular call option, and you want to find the implied volatility. The Black-Scholes formula is a monotonically increasing function of volatility. Which of the following is the most efficient method to calculate the implied volatility, given the observed option price and other known parameters (stock price, strike price, time to maturity, risk-free rate)? The Black-Scholes formula