In the early 1970s, Myron Scholes, Robert Merton, and Fisher Black made an important breakthrough in the pricing of complex financial instruments by developing what has become known as the Black-Scholes model. This model is used to determine the value of a call option. The model makes some assumptions regarding the call option, that:The underlying stock pays no dividends during the options life;The options contract to be priced is a European-style call option;Markets are efficient;There are no commissions in the transaction;Interest rates are assumed to be constant;Returns of the underlying assets follow a lognormal distribution. Therefore, the Black- Scholes pricing model is used for Options. A forward contract is a private and customizable agreement that settles at the end of the agreement and is traded over-the-counter. A futures contract has standardized terms and is traded on an exchange, where prices are settled on a daily basis until the end of the contract.