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Why is the forward rate suitable for being used as the underlying in Black's model?

Thanks

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As a trader I used Black model (amongst others) to value swaptions, where the forward swap rate is the key observable underlying rate. Any market where the forward is the traded instrument would lend itself to Black.

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  • $\begingroup$ Recall that F. Black's article was called The Pricing of Commodity Contracts (1976) and that commodities are traded in the form of forwards and futures. $\endgroup$ – noob2 Dec 9 '15 at 16:34

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