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20b - Chapter 20(Part 2 20(Part 2 Options Markets...

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8/2/2011 1 Chapter 20 (Part 2) Options Markets: Introduction Thursday: Work on Chapter 20 problems Friday: Chapter 21 (Part 1) – Option Valuation (Binomial & Black-Sholes) Friday: Chapter 21 (Part 1) Option Valuation (Binomial & Black Sholes) 0 T | | S 0 S T = ? t Yesterday A call option gives its holder the right to purchase an asset (stock) for a specified price (exercise price, X) on or before some specified expiration date (T). A put option gives its holder the right to sell an asset for a specified price (exercise price, X) on or before some specified expiration date (T). P t C ll P it Th Put-Call Parity Theorem: More general condition: 0 20 1 1 T f X C S P . r 0 20 2 P C S PV X PV( dividends ) .
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8/2/2011 2 Yesterday Protective Put Stock + Put Why?
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