- The time variable in Black-Scholes is T.
- It represents the time remaining until expiry.
- It is normalized to 1 year.

- Most off-the-shelf pricing models define that year as comprising 365 days. This is known as a
**calendar day**model. - T for a 1-year straddle equals 1. If one day elapses, T = 364/365.
- If an option has 6 months to expiry, T is approximately .5. I say “approximately because .5 would actually correspond to 182.5 days

- Some people use a
**business day**model. Those models assume a 251-day year by subtracting 104 weekend days and 10 holidays. (Juneteeth is a relatively new holiday.)

Next Section:

**Let’s Lay Out Some Intuition**