A. Caggia, M. Armanini Financial Investments & Pricing 2015/2016

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A. Caggia, M. Armanini Financial Investments & Pricing 2015/2016 Options A. Caggia, M. Armanini Financial Investments & Pricing 2015/2016

Key terminology Right but not obligation Terms Call: right to buy Put: right to sell Strike price or excercise price Premium: cost of the option Expiration date American option European option

Bloomberg quotes

Payoff at expiration: Call option holder Right to buy at price K Call Value 45° S K S1 Stock price

Payoff at expiration: Put option holder Right to sell at price K Put Value 45° S K S1 Stock price

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