An analytical option pricing formula which is used to price European options on non-dividend paying equity.

The Black-Scholes (BS) method can be extended to price American options. The Snowgold Option Calculator uses the Barone-Adesi and Whaley (BAW) method which prices an American option by valuing the corresponding European option using the BS method and then adds on an early exercise premium if the underlying price exceeds a critical stock price calculated by the model.