price is determined by supply and demand, isn't that a fact like 1 + 1 = 2 ? [
The price of an option on a stock has nothing to do with supply and demand. It relies on non-arbitrage condition that determine the unique price. Not saying this model relies on non-arbitrage hypothesis, but no, price is equal to match of supply and demand is not 1+1.
sorry i don't get it: why will the price eventually hover around the model price?
Model cannot micro-estimate or precisely track the bit on. Price, but if you want it to be right, in the long run price has to recover to model price. That’s it. Not too scientific.