12.10 The derivation of the black scholes Differential equation δS=μSt+oSz δf= 0f,。,0f,10 +2 f-2c2 of St+=oS 8z dt aS C W e set up a portfolio consisting of 1: derivative +- shares aS Options, Futures, and Other Derivatives, Sth Edition C 2002 by John C. Hull12.10 Options, Futures, and Other Derivatives, 5th Edition © 2002 by John C. Hull 10 The Derivation of the Black-Scholes Differential Equation : shares ƒ + : derivative W e set up a portfolio consisting of ƒ ƒ ½ ƒ ƒ ƒ S S z S S t t S S S S S t S z   − s d   d +         s   +   m +   d = d = m d + s d 1 2 2 2 2