ELI5: Explain Like I'm 5

Bjerksund and Stensland

Bjerksund and Stensland is a mathematical model used by financial analysts and investors to calculate the fair value of an option. An option is a type of investment that gives you the right, but not the obligation, to buy or sell an asset (like a stock) at a specific price at a certain date in the future. Bjerksund and Stensland help investors figure out how much money the option is worth. They do this by looking at lots of factors like how much the stock you're buying or selling is worth today, how risky it is, how long until the option expires, and how likely it is that the stock will go up or down in the future. With all this information, Bjerksund and Stensland can tell you how much the option is worth and this can help investors make decisions about whether they should buy or sell the option.