When the Black-Scholes Options Pricing is Inaccurate

The Black-Scholes options pricing method isn't an accurate way to evaluate an option if you understand the underlying company well. Black-Scholes is based on past volatility, which may not be an accurate reflection of future volatility. Unusual circumstances aren't reflected in the calculation, such as a fundamental change in the business, a restructuring, spinoff, or merger, or other major change in the company's competitive position or business conditions.