2 12 mechanics of trading continued s s placing an

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Unformatted text preview: chanics of Trading (continued) s s Placing an Offsetting Order x In the exchange-listed options market x In the over-the-counter options market Exercising an Option x European vs. American style x Assignment x Cash settlement Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 13 Option Price Quotations s s See web sites of newspapers and options exchanges Problems x Delayed information x Nonsynchronized prices Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 14 Types of Options s s s s s Stock Options Index Options Currency Options Other Types of Traded Options x interest rate options x currency options x options attached to bonds x exotic options x warrants, callable bonds, convertible bonds x executive options Real Options Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 15 Executive Stock Options s s s Executive stock options are a form of remuneration issued by a company to its executives executives They are usually at the money when issued When options are exercised the company issues more are stock and sells it to the option holder for the strike price and Chance/Brooks An Introduction to Derivatives and Risk Man Ch. 2: 16 Executive Stock Optio...
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