Options Lecture - Debt Instruments and Markets Professor...

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Debt Instruments and Markets Professor Carpenter Options 1 + Options + Concepts and Buzzwords Put-Call Parity Volatility Effects Call, put, European, American, underlying asset, strike price, expiration date Readings Tuckman, Chapter 19 Veronesi, Chapter 6
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Debt Instruments and Markets Professor Carpenter Options 2 + Call Option A European call option is a contract that gives the owner the right but not the obligation to buy an underlying asset at a pre-specified strike price on a pre-specified expiration date. An American call option gives the owner the right to buy the asset at the strike price any time on or before the expiration date. + Put Option A European put option is a contract that gives the owner the right but not the obligation to sell an underlying asset at a pre-specified strike price on a pre-specified expiration date. An American put option gives the owner the right to sell the asset at the strike price any time on or before the expiration date.
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Debt Instruments and Markets Professor Carpenter Options 3 + Call Payoff Let V T represent the value of the underlying asset on the expiration date T . Consider the payoff of a European call option with strike price K .
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  • Spring '15
  • Jennifer
  • Options, Strike price, Professor Carpenter

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