公司理财第七版Chap023.pptVIP

8 8 10 10 9 9 11 11 * 14 Protective Put - Long stock and long put Note: Explore other option strategies such as covered calls, straddles and strangles. 15 21 Point A -When the stock is worthless, the option is worthless. Why? Point B -When the stock price becomes very high, the option price approaches the stock price less the present value of the exercise price. Point C -The option price always exceeds its minimum value (except at maturity or when stock price is zero). Note: The value of an option increases with both the variability of the share price and the time to expiration. * 22 23 Note: See Spreadsheet Solutions: Using Black-Scholes Formula for a detailed description and example of this option pricing formula. 25 Real Options – Options embedded in real assets 26 Executive Stock Options – Long term call options given to executives as part of their compensation package. Warrants - Right to buy shares from a company at a stipulated price before a set date. Convertible Bond - Bond that the holder may exchange for a specific number of shares. Callable Bond - Bond that may be repurchased by the issuer before maturity at specified call price. McGraw-Hill/Irwin Copyright ? 2012 by The McGraw-Hill Companies, Inc. All rights reserved. Options The right but not the obligation… This chapter explores various options and their payoff structure. Basic Options Put Option The right to sell an asset at a specified exercise price on or before the exercise date Call Option The right to buy an asset at a specified exercise price on or before the exercise date Option Obligations Does the seller of a call option hope the price of the underlying security moves up or down? Does the buyer of a put option hope the price of the underlying security moves up or down? Option Value Option Value: The value of an option at expiration is a function of the stock price and the exercise price. Call Option Put Option Option Value: Example Option values given an exercise price of $720