Note #11

Note #11 - ECON 133 Securities Markets Lecture 11 Jia-Yuh...

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ECON 133 Securities Markets Lecture 11 Jia-Yuh Chen August 19, 2009
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Stock of the Day I I Whole Foods Market, Inc. (WFMI) and Costco Wholesale Corporation (COST) I The last of Peter Lynch-styled stock picks I Know what you are doing I Wait until the market turns irrational
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Beginning of Options I We like to have options I 1600s in Holland I I Gambling and counterparty risk I Chicago Board Options Exchanges 1973
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Options I I Option buyer I has the right, not the obligation I Option writer I has the obligation I Terms I call and put I strike/exercise I expiration date
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I Standardized contracts I CBOE I 100 shares per contract I four maturities per year I open interest I margin and mark-to-market I Moneyness I in, out of, and at I how to cash out? I European and American
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Example Strike: 20 Expiration: Dec 2009 Buy one contract of the call and one contract of the put
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Note #11 - ECON 133 Securities Markets Lecture 11 Jia-Yuh...

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