Profit profile Pay off profile Definitions know concepts Margin question- how your margin account behaves given certain prices (options) Ch. 10 Variables of option pricing slide 3 –input paramaters affecting stokc options Boundary counditions (eg. Lower bound for European calls) Put call parity –replicate by moving everything else in the other side sell most expensive buy least expensive Slide 5 Bull spread/bear spread using calls and puts, e.g. max profit in bull/bear spread Box spread-
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delivery today * forward – price today, delivery at a future date * future – price today, delivery at a future date Futures: * standardized with respect to quality, quantity and maturity * Clearing house * initial margins * Variation margins (marked to market) * Cash settled * Futures are a Zero Sum Loss Game * With cash settlement, the asset is never exchanged Users of future markets Hedgers: Selling Hedge: - Worried about a fall in price, so Sell Futures
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Week 4 1. How do you think a small margin for error affects communication on a project? When there is a small margin for error communication can be affected. In the project for Ball Corporation there is absolutely no room for errors and everyone involved in the project knows it. Because there is no room for errors everyone is really detailed when sharing information and in delegating assignments. The employees force themselves to pay close attention to every detail because every little detail
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Almaty 2012 Part 1: Option market On March 21, 2012 we took a short position in the close at the money April 2012 call option on ETF Spider. Option’s strike price is 140 and initial spot price is 139.53. 1.71$ was paid for this call option. At the same time short position in the close at the money June 2012 put option was taken. ETF Spider’s strike and initial spot prices are the same and 4.05$ was paid for put option
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fixed price. – Production companies who use the natural gas as a material in producing their final product. By fixing the price, they insure themselves from increasing prices and can forecast and meet their budgeted costs as well as budgeted profit margins. B. Fixed volume at price tied to a natural gas index. – Speculators who will engage in risky financial transactions in an attempt to profit from fluctuations in the market value of a tradable good. They focus purely on price movements
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Futures and Options in India BY: YOGIN VORA ON MARCH 25, 2010 NO COMMENT * Options Trading * Options Trade * Derivatives Trade * Trading in shares The Indian capital market has witness impressive growth and qualitative changes, especially over the last two decades. In the fifties, sixties and most of the seventies, it was in a dormant stage when the investors were generally not familiar with, or inclined towards, the corporate securities. During this time, only few companies
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I I ! An Introduction to Derivatives and Risk Management Don M. Chance Louisiana State University Robert Brooks University of Alabama THOMSON oj{ Au s r r ett e . a r e au . C .. nada . ~~".-."~'-~--"'---'"""" MeYlco' 5ing;1lpore· Spain' u nu e d K,.. gdom· umt e c ~t4t~es , c.~ ! , . THOMSON SOUTH-VVESTERN __~ Chapter 1 Preface XlII Iuuoduction PART I Options 21 Chapter 2 Chapter 3 Chapter -! Chapter 5 Chapter 6 Chapter 7
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advantage was narrowing and looked as if it would soon disappear. AT&T saw fierce price competition for telecommunications hardware and services in market areas where it had once reaped healthy profit margins. Traditional areas of AT&T’s business (telephone calls and telephone sets) were about to become low margin “commodity” businesses, where price would become the main factor used to choose among otherwise similar long distance companies. In response to this dramatic change, AT&T developed a new strategy
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1.How do you think a small margin for error affects communication on a project? In the project for Ball Corporation there is absolutely no room for errors and everyone involved in the project knows it. There is no room for errors everyone is really detailed when sharing information and in delegating assignments. The employees force themselves to pay close attention to every detail because every little detail counts. 2.In what ways do you act differently in a face-to-face meeting than you do
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OPTIONS FOR THE BEGINNER AND BEYOND In an increasingly competitive world, it is quality of thinking that gives an edge—an idea that opens new doors, a technique that solves a problem, or an insight that simply helps make sense of it all. We work with leading authors in the various arenas of business and finance to bring cutting-edge thinking and best-learning practices to a global market. It is our goal to create world-class print publications and electronic products that give readers
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