Define the ‘Risk-Free Rate’ Input in the Model

The risk-free rate is the theoretical rate of return of an investment with zero risk, often proxied by the yield on short-term government securities, such as US Treasury bills, that mature close to the option's expiration date. In the Black-Scholes model, this rate is used to discount the expected future payoff of the option back to its present value.

A higher risk-free rate generally increases the value of a call option and decreases the value of a put option.