chpt17 - Options Chapter17 Jones,Investments:Analysis...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Options Chapter 17 Jones, Investments: Analysis  and Management
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Why Options Markets? Financial derivative securities: derive  all or part of their value from another  (underlying) security Options are created by investors,  sold to other investors Why trade these indirect claims? Expand investment opportunities, lower  cost, increase leverage
Background image of page 2
3 Options Terminology Call  (Put) : Buyer has the right but not  the obligation to purchase  (sell)  a  fixed quantity from  (to)  the seller at a  fixed price before a certain date Exercise (strike) price: “fixed price” Expiration (maturity) date: “certain  date” Option premium or price: paid by  buyer to the seller to get the “right”
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 How Options Work Call buyer (seller) expects the price  of the underlying security to increase  (decrease or stay steady) Put buyer (seller) expects the price of  the underlying security to decrease  (increase or stay steady) At option maturity Option may expire worthless, be  exercised, or be sold
Background image of page 4
5 Options Trading Option exchanges are continuous  primary and secondary markets Chicago Board Options Exchange  largest Standardized exercise dates,  exercise prices, and quantities Facilitates offsetting positions through  Options Clearing Corporation » OCC is guarantor, handles deliveries
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/20/2010 for the course FCBA MBA608 taught by Professor Dr. during the Spring '10 term at Baptist College of Health Sciences.

Page1 / 22

chpt17 - Options Chapter17 Jones,Investments:Analysis...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online