# Latest Posts

### risk neutral measure - How To Understand the Drift of ln(S) if S Follows Geometric Brownian Motion

Because $\mathbb{E}\left(e^{\sigma W_t}\right) = e^{\frac{1}{2}\sigma^2T} > 1$, you need that correction to ensure that your asset grows on average at rate $\mu$ (or $r$ in the risk-neutral measure).... Read More

### How to use black scholes for spot trading?

I am going to assume that you meant to ask how we can use option prices to inform trading of underlying stocks. The Black-Scholes-Merton model says that under the physical measure, the underlying sto... Read More