Microsoft
Outline
1 Introduction
2 Overview of One -Step Binomial Model, Black-Scholes Merton Model and Put Call Parity:
2.1. One -Step Binomial Model
2.2. Black-Scholes Merton Model
2.3. Put Call Parity
3 Limitations of Analysis
4 Research Process: Microsoft
5 Research Process: Apple
6 Results and Conclusion
7 Reference List
8 Attachments
1. Introduction
The most common definition of an option is an agreement between two parties, the option seller and the option buyer, whereby the option buyer is granted a right (but not an obligation), secured by the option seller, to carry out some operation (or exercise the option) at some moment in the future.
Options come in several varieties:
A call option grants its holder the right to buy the underlying asset at a strike price at some moment in the future.
A put option gives its holder the right to sell the underlying asset at a strike price at some moment in the future.
There are several types of options, mostly depending on when the option can be exercised.
As we know the European options can be exercised only on the expiration date. American-style options are more flexible as they may be exercised at any time up to and including expiration date and as such, they are generally priced at least as high as corresponding European options1.
For a call option, the profit made at exercise date is the difference between the price of the asset on that date and the strike price, minus the option price paid. For a put option, the profit made at exercise date is the difference between the strike price and the price of the asset on that date, minus the option price paid.
The price of the asset at expiration date and the strike price therefore strongly influence how much one would be willing to pay for an option2.
2. Overview of One -Step Binomial Model, Black-Scholes Merton Model and Put Call Parity:
2.1 Black Sholes Model
As we know the formula options pricing models was first derived by Fisher Black
1 Introduction
2 Overview of One -Step Binomial Model, Black-Scholes Merton Model and Put Call Parity:
2.1. One -Step Binomial Model
2.2. Black-Scholes Merton Model
2.3. Put Call Parity
3 Limitations of Analysis
4 Research Process: Microsoft
5 Research Process: Apple
6 Results and Conclusion
7 Reference List
8 Attachments
1. Introduction
The most common definition of an option is an agreement between two parties, the option seller and the option buyer, whereby the option buyer is granted a right (but not an obligation), secured by the option seller, to carry out some operation (or exercise the option) at some moment in the future.
Options come in several varieties:
A call option grants its holder the right to buy the underlying asset at a strike price at some moment in the future.
A put option gives its holder the right to sell the underlying asset at a strike price at some moment in the future.
There are several types of options, mostly depending on when the option can be exercised.
As we know the European options can be exercised only on the expiration date. American-style options are more flexible as they may be exercised at any time up to and including expiration date and as such, they are generally priced at least as high as corresponding European options1.
For a call option, the profit made at exercise date is the difference between the price of the asset on that date and the strike price, minus the option price paid. For a put option, the profit made at exercise date is the difference between the strike price and the price of the asset on that date, minus the option price paid.
The price of the asset at expiration date and the strike price therefore strongly influence how much one would be willing to pay for an option2.
2. Overview of One -Step Binomial Model, Black-Scholes Merton Model and Put Call Parity:
2.1 Black Sholes Model
As we know the formula options pricing models was first derived by Fisher Black