Trillion Dollar Bet

Trillion Dollar Bet tells the story of one finance’s greatest formulas – the Black-Scholes options pricing model. This mathematical equation, developed by economists Fischer Black, Myron Scholes, and Robert Merton, revolutionized the world of finance and led to the explosive growth of the derivatives market.

The documentary traces the origins of the formula, beginning with the early work of French mathematician Louis Bachelier at the turn of the 20th century. It then follows the careers of Black, Scholes, and Merton as they refined and perfected the model in the 1960s and 1970s. Their groundbreaking work earned Scholes and Merton the Nobel Prize in Economics in 1997.

The film also chronicles the rise and fall of Long-Term Capital Management (LTCM), a hedge fund co-founded by Scholes and Merton that used sophisticated mathematical models to trade in financial markets. LTCM initially achieved spectacular returns, but its strategies unraveled during the 1998 Russian financial crisis, leading to a near-collapse that threatened the global financial system.

Through interviews with key figures, including Scholes and Merton themselves, the documentary provides insight into the development of modern financial theory and its practical applications. It highlights the power of mathematical models to transform markets, while also illustrating their limitations and potential dangers when misapplied or overused.