MATLAB: Black-Scholes formula

black-scholes formulaMATLAB

I tried to build this function, but when I try it, this gives me different result, compared to the online solvers.
Does anyone spots the error?
function [C] = BlackScholesCall(S,K,t,r,sd)
% Calculates the price of a call option
% INPUT   S 1x1 ... Current stock price (underlying)
%         K 1x1 ... Strike price
%         t 1x1 ... Time to maturity
%         r 1x1 ... Risk-free interest rate
%         sd 1x1 ... standard deviation (volatility of the underlying)
% OUTPUT  C 1x1 ... The price of a call option
% USAGE   BlackScholesCall(S,K,t,r,sd)
C = S*normcdf((log(S/K)+(r+(1/2)*sd^2)^t)/(sd*sqrt(t)))-K*exp(-r*t)*normcdf((log(S/K)+(r+(1/2)*sd^2)^t)/(sd*sqrt(t))-sd*sqrt(t));
end

Best Answer

Both places where you have
(r+(1/2)*sd^2)^t
it should be
(r+(1/2)*sd^2)*t
FYI, I think this would be been easier to debug if you had defined the variables d1 and d2, as in the wikipedia page. That's how I broke it out and found the error.
Related Question