Theprice of corn is a critical variable in the world food equation, and food markets are on edge because U.S. corn stocks are plummeting due to the ethanol mandate.
Or, to turn theequation around: How large a band do you have to draw around today's price to have a certain likelihood (say, 95%) of including tomorrow's price?
The Black-Scholes equation, brainchild of economists Fischer Black and Myron Scholes, provided a rational way to price a financial contract when it still had time to run.