Ch08 - Mechanics of Options Markets Chapter 8 Fundamentals...

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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007 8.1 Mechanics of Options Markets Chapter 8
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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007 8.2 Types of Options z A call is an option to buy z A put is an option to sell z A European option can be exercised only at the end of its life z An American option can be exercised at any time
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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007 8.3 Option Positions z Long call z Long put z Short call z Short put
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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007 8.4 Long Call (Figure 8.1, Page 186) Profit from buying one European call option: option price = $5, strike price = $100. 30 20 10 0 -5 70 80 90 100 110 120 130 Profit ($) Terminal stock price ($)
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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007 8.5 Short Call (Figure 8.3, page 188) Profit from writing one European call option: option price = $5, strike price = $100 -30 -20 -10 0 5 70 80 90 100 110 120 130 Profit ($) Terminal stock price ($)
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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007 8.6 Long Put (Figure 8.2, page 188) Profit from buying a European put option: option price = $7, strike price = $70 30 20 10 0 -7 70 60 50 40 80 90 100 Profit ($) Terminal stock price ($)
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Fundamentals of Futures and Options Markets , 6 th Edition, Copyright © John C. Hull 2007
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This note was uploaded on 05/10/2011 for the course MGT D72 taught by Professor Chau during the Spring '11 term at University of Toronto.

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Ch08 - Mechanics of Options Markets Chapter 8 Fundamentals...

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