In their paper on the theory of option pricing, Black and Scholes spelled out their assumptions. These included not just the basic assumption that the "stock price follows a [log-normal] random walk in continuous time," but also assumptions about market conditions: that there are "no transaction costs in buying or selling the stock or the option"; that it is "possible to borrow any fraction of the price of a security to buy it or to hold it," at the riskless rate of interest; and that there are "no penalties to short selling" (Black and Scholes 1973, p.

Donald MacKenzie, An Engine, Not a Camera, loc. 627