选择是类型衍生物.pptxVIP

Derivatives OptionsHistorical Topics (Internal to the Corp)1 - Capital Budgeting (Investment)2 - Capital Structure (Financing)TodayWe are leaving Internal Corporate FinanceWe are going to Wall St “Capital Markets”Options - financial and corporateOptions are a type of derivativeOptionsTerminologyDerivatives - Any financial instrument that is derived from another. (e.g.. options, warrants, futures, swaps, etc.)Option - Gives the holder the right to buy or sell a security at a specified price during a specified period of time.Call Option - The right to buy a security at a specified price within a specified time. Put Option - The right to sell a security at a specified price within a specified time.Option Premium - The price paid for the option, above the price of the underlying security.Intrinsic Value - Diff between the strike price and the stock priceTime Premium - Value of option above the intrinsic valueOptionsTerminologyExercise Price - (Striking Price) The price at which you buy or sell the security.Expiration Date - The last date on which the option can be exercised. American Option - Can be exercised at any time prior to and including the expiration date.European Option - Can be exercised only on the expiration date. All options “usually” act like European options because you make more money if you sell the option before expiration (vs. exercising it). 3 vs. 70-68=2Option ObligationsOption ValueThe value of an option at expiration is a function of the stock price and the exercise price.Option ValueThe value of an option at expiration is a function of the stock price and the exercise price.Example - Option values given a exercise price of $85OptionsCBOE Success1 - Creation of a central options market place.2 - Creation of Clearing Corp - the guarantor of all trades.3 - Standardized expiration dates - 3rd Friday4 - Created a secondary marketOptionsComponents of the Option Price1 - Underlying stock price2 - Striking or Exercise price3 - Volatility of the stock