Not enough input arguments.

% This function computes the Black-Scholes option price for both put and call
% Using given parameters 
% -------------------------------------------------------------------------

function OptionPrice = BSAnalytical(CallPutFlag,S,X,T,r,sigma)

% -------------------------------------------------------------------------
% INPUTS:
% CallPutFlag: either 'C' or 'P' indicates call or put
% S          : current stock price
% X          : strike price
% T          : time to maturity (in years)
% r          : interest rate 
% OUTPUT:
% OptionPrice: option price 
% -------------------------------------------------------------------------
% sqrt(T)     : Obtain the square root of time to maturity 

      % Black-Scholes Formula
      d1 = (log(S / X) + (r + sigma ^ 2 / 2) * T) / (sigma * sqrt(T));
      d2 = d1 - (sigma * sqrt(T));

      if (CallPutFlag == 'C'),
          OptionPrice = S * normcdf(d1) - X * exp(-r * T) * normcdf(d2); % compute the call price
      else
          OptionPrice = X * exp(-r * T) * normcdf(-d2) - S * normcdf(-d1); % compute put price 
      end
  end

Answer 1

[Geoff Hayes]

Unati - the error message is telling you exactly what the problem is: you are calling the BSAnalytical function and not supplying enough input parameters. The function signature is

 function OptionPrice = BSAnalytical(CallPutFlag,S,X,T,r,sigma)

so you must provide the CallPutFlag, S, X, T, r, and sigma inputs. For example, define these variables as (see the function header for description of each input variable with the exception of sigma)

 CallPutFlag = 'C';
 S = 42.00;  % current stock price
 X = 39.00;  % strike price
 T = 12;     % time to maturity in years
 r = 0.05;   % interest rate
 sigma = 0.1;

 OptionPrice = BSAnalytical(CallPutFlag,S,X,T,r,sigma);