Left With No Option

 A quarter of a century ago, in April 1997, I read that the Nobel Prize for Economics had been awarded to two fellows, Merton and Scholes, who had created the Black-Scholes Option Pricing model (with another guy called Black, who, well, blacked out from the effort and went cuckoo).  My first reaction -actually, only reaction - was to check out legal ways by which the goofy imbeciles on the Nobel Committee could be hung upside down, a few inches above six salt water crocodiles that had only been fed cauliflower noodles and pappadums
 
While doing my MBA and attempting to change the course of human history by majoring in finance, I took a course in International Finance.  Of course, I had done many stupid things in life earlier (like cycling with a loose handlebar on MG Road to win a bet), but this was when I summited the peak and planted a flag.  For starters, I understood nothing in the course and, in the class, a thin film would cover my eyes, the chin would drop three inches, the brain could only think of all the Hollywood films I had seen on escape and I would fervently pray for deliverance (no, no, not the deliverance of the question paper.  Though, in retrospect, that may not have been a bad idea….). 
 
We had a prof called Apte, who had brains oozing out of his ears and dripping onto the Cadapa floor to form sedimentary rock.  He took a dim view of minions (well, guess you know whom I am referring to here, don’t stress the point, will you?).
 
To make matters God-awful, there were classmates who seemed to know what was going on….tll we came to this damn option pricing model and the three genocide-perpetrators who invented it.

Take a close look at the formula below and let me know if you understand it.  Here is a tip: if you have it figured out, then you have got it all wrong.  At that time, the only one on the planet - other than the three quantitative-perverts - who figured it out was Apte, and when he took the class on the B-S Option Pricing Model, his eyes lit up, words flowed like a passage from Auden and he filled the board with all kinds of funny looking squiggly stuff and squealed in delight – damn him - as he took us through this deranged formula for Armageddon.  I kept staring at the formula and seeing a whistle to the power of 2 (whistle squared. Hope that makes sense to you) and elsewhere I could swear there was a whistle square-root t as well.  I saw heaps of stars too, Orion being the main constellation.
 

In his final class on B-S OPM, he asked at the end, ‘Any questions?’ and the only one the class asked was, ‘Is this an Optional question?’, which, we all agreed, was the only humour in a five km radius, so we all laughed hysterically.   
 
In ’97, I cursed the Nobel committee, their parents and ancestors freely (big help, that was) and wished that Scholes and Merton would be served as that thing you get in Bangalore called shawarma. 
And it sort of happened.
This Scholes & Sadists gang had created a company called Long Term Capital Management to apply some of their formula stuff to the real world.  In ’98, it went so badly bust that, for once in their life, they had no option, let alone a bloody price for it. 
 
Moral of the story: only believe in formulas that involve potassium permanganate. 
 
ps (for those whose business it is to close all loops and know everything):  I passed IntFin, but in every nightmare in later years, I failed.  B-S figured prominently in those as a compulsory question of 55 marks.