Introduction to Options
About the Lecture
The lecture Introduction to Options by Edu Pristine is from the course Archiv - Financial Markets and Products. It contains the following chapters:
- What are Options?
- Intrinsic Value of Options
- Playoffs of Options
Author of lecture Introduction to Options
Edu Pristine
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Excerpts from the accompanying material
... Options. What are Options? Intrinsic Value of Options. Returns to ...
... Put Options Call Option: Gives option holder the right to buy the asset at an agreed price.Put Options: Gives option holder the right to sell the asset at an agreed price. European or ...
... an option is more likely for: A. European calls options on stocks paying large dividends. B. American ...
... exercised early because it is likely that the stock might recover from the fall D. Though this might be profitable if the stock prices ...
... stock price and all other variables remain the same what will be the impact ...
... is less than the strike price carried by a put option, the put option is termed in the money, as exercising it results in a positive pay off. Out of the money: When the price of the underlying is less than the strike price carried by a call option, the call option is termed out of the money, as exercising it will result ...
... of 5. Consider options on a stock whose price is expected to range from 0–10 at the time of expiration. If share price is less than 5, then the pay off to the option buyer is nil. If the price is more than 5, the ...
... moves down ward linearly with the share price Stock Price Call Value Put Value Strike Price ...
... price of 5. Consider options on a stock whose price is expected to range from 0–10 at the time of expiration If share price is more than 5, then the pay off to the option buyer is nil. If the price is less than ...
... pay-off moves down ward linearly with the share price Stock Price Short Put-Pay off Short Put-Pay off Stock Price Call Value Put Value Strike Price ...
... Long call payoff = Max (ST– X,O) X 0 ST Short ...
... structure behavior which can be applied across all bonds. The basic advantage of this approach is that only volatility and structure of small number of principal ...
... buyers and sellers. Put Call Parity. Bounds and Option Values ...
... asset, in future, at a pre-decided price (i.e. exercise or strike price), without any obligations. The seller of the option collects a payment (Premium) from the buyer for providing the option. Types of options: Call ...
... call options on stocks paying small divide nds. C. American put options deep in the money and ...
... Small dividends will not make much of a difference in the price fall in the stock C. A deep in the money put option should ...
... an increase in the risk-free interest rate on the price of an American put ...
... price of the option, the option is termed at the money and exercising it carries a nil pay-off. In the money: When the price of the underlying is greater than the strike price carried by a call option, the call option is termed in the money, as exercising it results in a positive pay off. When the price of the underlying ...
... 5, the pay-off moves upward linearly with the share price. Stock Price Call Value Put Value Strike Price 0 0 5 5 1 0 4 5 2 0 3 5 3 0 2 5 4 0 1 5 5 0 0 5 6 1 0 ...
... price of 5. Consider options on a stock whose price is expected to range from 0–10 at the time of expiration. If share price is less than 5, then the pay off to the option seller is nil. If the price is more than ...
... than 5, the pay-off moves linearly with the share price. Stock Price Call Value Put Value Strike Price 0 0 5 5 1 0 4 5 2 0 3 5 3 0 2 5 4 0 1 5 5 0 0 5 6 1 0 5 ...
... of 5. Consider options on a stock whose price is expected to range from 0–10 at the time of expiration. If share price is more than 5, then the pay off to the option seller is nil. If the price is less than 5, ...
... X 0 S T Long put payoff = Max (X – S ...
... exercised, the option writer makes profit from the premium. If the option is exercised, the option writer may make profit or loss depending on the spot price of the underlying asset at the time. Example: A Call option writer gets premium of 1 for an option with ...
... -2 1 5 9 1 -3 1 5 10 1 -4 1 5 Stock price Short put payoff 0 4 8 12 -5 -4 -3 2 Short put payoff with premium -2 -1 0 1 2 6 ...
