tailieunhanh - Essentials of Investments: Chapter 15 - Options Markets

Essentials of Investments: Chapter 15 - Options Markets Option Terminology, Market and Exercise Price Relationships, American vs European Options, Different Types of Options, Payoffs and Profits on Options at Expiration - Calls. | 1 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Chapter 15 Options Markets Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 2 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Option Terminology • • • • • Buy - Long Sell - Short Call Put Key Elements – Exercise or Strike Price – Premium or Price – Maturity or Expiration Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 3 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Market and Exercise Price Relationships In the Money - exercise of the option would be profitable Call: market price>exercise price Put: exercise price>market price Out of the Money - exercise of the option would not be profitable Call: market price>exercise price Put: exercise price>market price At the Money - exercise price and asset price are equal Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 4 Bodie • Kane • Marcus Essentials of Investments Fourth Edition American vs European Options American - the option can be exercised at any time before expiration or maturity European - the option can only be exercised on the expiration or maturity date Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights reserved. 5 Bodie • Kane • Marcus Essentials of Investments Fourth Edition Different Types of Options • • • • • Stock Options Index Options Futures Options Foreign Currency Options Interest Rate Options Irwin / McGraw-Hill © 2001 The McGraw-Hill Companies, Inc. All rights .