In the Black-Scholes Formula, "d1" is derived from the following formula: where: ln = natural logarithm S = price of the stock E = exercise price r = risk-free interest rate (the annualized, continuously compounded rate on a safe asset with the same maturity as the option) = the volatility of the stock - that is, the standard deviation of the annualized, continuously compounded rate of return on the stock T = time to maturity of the option in years back