曼彻斯特商学院课件－期权[46p].pptVIP

Reading Hull Chapter 1: Perhaps re-read the section on options which is in sections 1.5 – 1,10. Hull Chapter 7: This starts with the basics of options and then goes on into the specific details of trading. Read up to 7.4 for the crucial details and the rest if you’re still interested. Hull Chapter 8: This is quite interesting but perhaps a little technical at this point in time. The most important part as regards the lecture is 8.4 and perhaps 8.5. 8.1 is interesting to see the crucial factors in determining the price of an option and will be useful for future reference (i.e. the last two weeks). Hull Chapter 9: Quite a nice chapter explaining options strategies, I’m going to work through a sample of these in class so it may be useful to famililiarise yourselves with the principal strategies. Options: Introduction Futures contracts are contracts which cost nothing to enter. This is because if you are in the long position you gain when the spot price of the underlying asset, S, rises, you also lose when the price goes down (and vice versa with the short position). An option is similar in many ways to a futures contract in that you have the right to buy (or sell) at a certain price in the future (this time it is called the exercise price). However, the principal difference is that you don’t have the obligation to buy at this price – you have the option as whether or not you choose to buy (or sell) at this price. Clearly you will have to pay some premium for this privilege. How much? Why options? Options can again be used for three main purposes: hedging, speculating and arbitraging. An option enables you to hedge against adverse market movements (e.g. price of oil, price of corn, stock market value, interest rate changes) without, necessarily, limiting your potential gain should the market actually move in your favour. Just like with a futures contract an option enables you to leverage your position and hence make it easier to speculate on market movements. Again