## The Original Black-Scholes Model

The original Black-Scholes option pricing model (Black, Scholes, 1973) assumes that the underlying security does not pay any dividends. In other words, dividends don't enter option price calculation in any way.

## Black-Scholes(-Merton) Model Expanded for Dividends

The spreadsheet uses the expanded version of the model (Merton, 1973) that can price options on securities that pay a dividend. The calculation assumes that the underlying security pays a **continuous** dividend at the rate you set as entry parameter.

Note: If you want the exact original Black-Scholes model, just set dividend yield to zero.