MATLAB: Vectorization of a function

MATLABvectorization

I have dotted all the variable that are defined as a vector, but matlab gives me an error.
Do you see where is my problem?
function [C] = BlackScholesCall(S,K,t,r,sigma)
% 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
%         sigma 1x1 ... standard deviation (volatility of the underlying)
% OUTPUT  C 1x1 ... The price of a call option
% USAGE   BlackScholesCall(S,K,t,r,sigma)
d1=(log(S/K.))+(r+(1/2)*sigma^2)*t)/(sigma*sqrt(t));
d2=d1-sigma*sqrt(t.);
C=(S*normcdf(d1))-(K.*(exp(-r*.t))*normcdf(d2));
end
Code to call the function:
S = 22
K = 20:25
t = 0.1:0.1:0.6
r = 0.02
sigma = 0.25
C = BlackScholesCall(S, K, t, r, sigma)
Thank you very much!

Best Answer

The problem is that you don't seem to have a grasp on how the "." syntax actually works. (Sorry if that sounds harsh!)
For example, you have
log(S/K.)
I'm not sure what you intend there -- just stating that K is a vector? -- but that's just not how it works. You don't just "dot the vectors". Oversimplifying a bit -- you dot the operations not the variables.
I would start by reading this documentation.
Your code is just a bit tricky to fix, because you are also trying to use two vectors of different lengths, and I'm guessing you actually want all combinations of K and t to generate results. So, you actually have two-dimensional input. Is that right?
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