In 1973, three economists — Fischer Black, Myron Scholes, and Robert Merton — published a closed-form pricing equation that turned options from an obscure side market into the largest derivatives market on earth. Within a year of the paper's publication in the *Journal of Political Economy*, the Chicago Board Options Exchange opened, and within a decade essentially every institutional risk-management desk in the world was running variants of their formula. Merton and Scholes shared the 1997 Nobel Prize in Economics for the work; Black had died two years earlier and was not eligible.

Forty-plus years later, the same fundamental insight underlies every option price an investor sees on any platform — including the option chain you'll learn to read in this elective. But the same elegance that made the formula a Nobel-Prize-winning advance also makes options the fastest way for a retail investor to lose money.