Trillion Dollar Bet

Trillion Dollar Bet tells the story of one of finance’s most influential formulas: the Black–Scholes options pricing model. This mathematical equation, developed by economists Fischer Black, Myron Scholes, and Robert C. Merton, revolutionised the world of finance and helped fuel 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 twentieth century. It then follows the careers of Black, Scholes, and Merton as they refined and perfected the model during the 1960s and 1970s. Their groundbreaking work ultimately 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 relied heavily on sophisticated mathematical models to trade financial markets. LTCM initially achieved spectacular returns, but its strategies unravelled during the Russian financial crisis of 1998, leading to a near-collapse that threatened the stability of the global financial system.

Through interviews with key figures, including Scholes and Merton themselves, the documentary offers insight into the development of modern financial theory and its real-world applications. It highlights the power of mathematical models to transform markets, while also illustrating their limitations and the potential dangers of relying on them too heavily or without sufficient caution.