MGT339H5 Lecture 5: call & put option
Document Summary
Exam: multiple choice (concepts) look at concept questions in presentation short answer questions wacc (similar intensity) but less marks, follow process (get part marks) 3 hour exam, formula sheet (a4, double sided, bring 2 calcs (financial calc, scientific) What are derivatives: not valuable in themselves speculations on what exists out there derive value from underlying asset. Exchange traded derivatives: specialized, contracts = standardized and backed up by clearing house. Over the counter derivatives: do not trade in centralized market market created by dealers. Decide when options are good for you/bad for you. Servant (writer) pay salary to writer to be servant to master. Call options: the right to buy a given quantity of some asset at some time in the future, at a price agreed upon today. Put options: the right to sell a given quantity of some asset at some time in the future, at a price agreed upon today.
