A Research on the Application of Option Pricing Strategy Framework Based on BS Model

Abstract

This paper first reviews the development history of option modeling and its application in corporate strategy, providing a comprehensive background for understanding its evolution. It introduces the European option pricing model studied by scholars in the past, particularly focusing on the Black-Scholes (BS) model, a foundational tool in financial modeling. After establishing the research significance, this paper discusses several basic properties and influencing factors of the BS model while introducing real options as a dynamic framework for strategic decision-making. The core focus of this paper lies in the modification and adaptation of the BS model at the corporate strategy level. Specifically, it develops a combined model that integrates the BS real option method to address the limitations of traditional models, enhancing their applicability to complex business scenarios. Xinhua Wenxuan Company is employed as a case study to validate the feasibility of this refined model, providing a practical evaluation of its results. Lastly, this paper highlights the future research direction of this model, underlining its adaptability and potential for broader applications in corporate strategic management, particularly in industries characterized by high uncertainty and innovation.