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Options -- Contract

Options -- Contract. Calls and Puts Underlying Security (Number of Units) Exercise or Strike Price Expiration date Option Premium American, European, Asian, etc. Options -- Markets. 1 Buyer + 1 Seller (writer) = 1 Contract Examples of Price Quotations

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Options -- Contract

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  1. Options -- Contract • Calls and Puts • Underlying Security (Number of Units) • Exercise or Strike Price • Expiration date • Option Premium • American, European, Asian, etc.

  2. Options -- Markets • 1 Buyer + 1 Seller (writer) = 1 Contract • Examples of Price Quotations • Premium = Intrinsic Value + Time Prem • Options available on • Equities • Indicies • Foreign Currencies • Futures

  3. Options -- Basic Strategies • Buy Call • Sell (write) Call • Buy Put • Sell (write) Put • Covered Call • Protective Put

  4. Options -- Advanced Strategies • Straddle • Strips and Straps • Vertical Spreads • Bullish • Bearish

  5. Options - Determinants of Value • Value of Underlying Asset • Exercise Price • Time to Expiration • VOLATILITY • Interest Rates • Dividends

  6. Options -- Black Scholes Option Pricing Model • C = SN(d1) - Xe-rTN(d2) ln(S/X) +(r+2/2)T d1 = ---------------------------1/2d2 = d1 - 1/2 • P = C + Xe-rT - S

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