Final answer:
The symbol σ in the Black-Scholes-Merton model represents the volatility of the underlying asset, which is a variable value determined iteratively for options pricing.
Step-by-step explanation:
The question is related to the use of the Black-Scholes-Merton (BSM) model, which is a mathematical model for pricing an options contract. In this context, the symbol σ represents the volatility of the underlying asset. The volatility is a measure of how much the asset's price is expected to fluctuate, and in the BSM model, it is typically determined iteratively because the model assumes that the returns on the underlying asset are normally distributed.
Therefore, σ is not a constant, nor a random value; it is a variable value (Option B) that can change over time and must be estimated. For options pricing, market participants often iterate to find the implied volatility that makes the model's price equal to the market price.