This paper follows up a discussion in the authors previous work on Louis Bachelier, examining the Black Scholes Merton model and reviewing the Payoff, Profit and Value of the option contract so defined. The paper in doing so addresses the contention that a perfect hedge can be achieved finding...

This paper reviews the form of the Louis Bachelier model for the modern option contract. This enables basic model properties to be analysed and the model's key elements to be defined being the intrinsic value and the instability or option risk premium. Further the paper reviews the option...