A review of the effect of pharmaceutical firm drug announcements on stock option pricing.

Since the Black and Sholes published their work in option pricing in 1973, there have been a great number of dissertations, theses, and articles published on options pricing. Several articles discussed American options and European options. Many articles where empirical in nature. In this article, we review some of the literature in this area and then discuss in a descriptive way the effect of pharmaceutical companies' announcements of new drugs on the market or drug withdrawals from the market on their stock options. This article should be the beginning of the discussion on how stock prices might affect the cost of drugs and the affect of the affordability of drug prices, if any.