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I am using the following function to get option pricing but it does not give me the right answer ($10.50). Where is my problem:

FinancialDerivative[{"American", "Call"}, {"StrikePrice" -> 705.00, 
  "Expiration" -> 4}, {"InterestRate" -> 0.64, "Volatility" -> 27.69, 
  "CurrentPrice" -> 716.00}]

You can verify the inputs yourself: enter image description here

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    $\begingroup$ Just two observations: "Expiration" is measured in years, "Volatility" in percent, i.e. 0.2769 in your case. $\endgroup$ – b.gates.you.know.what May 9 '16 at 12:24
  • $\begingroup$ Welcome! I suggest the following: 1) As you receive help, try to give it too, by answering questions in your area of expertise. 2) Take the tour and check the faqs! 3) When you see good questions and answers, vote them up by clicking the gray triangles, because the credibility of the system is based on the reputation gained by users sharing their knowledge. Remember to accept the answer, if any, that solves your problem, by clicking the checkmark sign! $\endgroup$ – user9660 May 9 '16 at 13:17
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I don't get the exact same answer as the calculator I found here or here or here.

Sadly, I can't get any of them to agree with each other when we ask for "American" pricing, so there seems to be some variability in their calculators.

But I can get the exact same value from Mathematica if I use the "European" pricing, which uses the Black-Scholes model, if I make a few key changes to your inputs. Both the interest rates and the volatility are percentages, so multiply the numbers you input by 0.01. And the "Expiration" should be given in years (4/365) or by using DatePlus[DateList[], 4]. So this,

FinancialDerivative[{"European", 
  "Call"}, {"StrikePrice" -> 705.00, 
  "Expiration" -> 4./365}, {"InterestRate" -> 0.0064, 
  "Volatility" -> .2769, "CurrentPrice" -> 716.00}]
(* 14.8954 *)

matches exactly what you find online.

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