The only difference between the two call options is

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Unformatted text preview: iagram as the value of the call (put) option is the difference between the underlying stock price and the exercise price (the exercise price and underlying stock price). For a given underlying stock price the value of the call decreases (put increases) when the exercise price increases 3. Volatility of the underlying stock price Consider call options on two stocks. The only difference between the two call options is the volatility in the underlying stock price: One stock has low stock price volatility, whereas the other has high. This difference is illustrated in the position diagrams where the bell-shaped line depicts the probability distribution of future stock prices. Please click the advert what‘s missing in this equation? You could be one of our future talents maeRsK inteRnationaL teChnoLogY & sCienCe PRogRamme Are you about to graduate as an engineer or geoscientist? Or have you already graduated? If so, there may be an exciting future for you with A.P. Moller - Maersk. w Download free ebooks at 78 Corporate...
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