Options part 1

Рет қаралды 256

3 ай бұрын

In this video, I describe options and define puts and calls. I show how to determine the payoffs and profits from options, and how to determine the intrinsic value and speculative value of an option. I explain the put-call parity relation and how the Black-Scholes Option Pricing Model works. I also describe how leverage provides options to equity holders at firms with debt on their balance sheets.

Пікірлер: 11

@aurinator 3 ай бұрын

I always pronounced it "Ex-Pie-Err-Ee." Also, "speculative" value was part of Extrinsic Value the way I learned them and it was never referred to as that.

@StephenHaggardPhD 3 ай бұрын

www.merriam-webster.com/dictionary/expiry Apparently both pronunciations are acceptable. Interesting about the idea of extrinsic value. Is that the same as the option premium or market value?

@aurinator 3 ай бұрын

The way I learned it, Extrinsic Value was everything beyond Intrinsic Value@@StephenHaggardPhD, but yes on further consideration I think it's synonymous with the Premium as it decays until expiry. Then yeah, Google confirms it with "Extrinsic value measures the speculative premium that is priced into an option in anticipation of the potential future movement of the underlying asset." So it seems like you learned it as the term "Speculative Value," but I just hadn't heard that one yet.

@StephenHaggardPhD 3 ай бұрын

Apparently speculative value and extrinsic value are the same. www.investopedia.com/terms/e/extrinsicvalue.asp Thanks for the lesson!

@aurinator 3 ай бұрын

Does this class eventually segue into The Wheel Options' Strategy and how it's capable of entirely replacing a full-time income, and well above the US Median Income as well - even with the Daily Expiration Index Options like SPY or QQQ. Because it was at the point of learning that where the possibilities of Options completely blew my own mind.

@StephenHaggardPhD 3 ай бұрын

No, sorry. It’s just a corporate finance class. ☹️

@AnonymousanonymousA 3 ай бұрын

mathematically if it wasn't rigged there should be at least a few trillionaires from options

@StephenHaggardPhD 3 ай бұрын

In a way you are correct. We know that summing the profits from the two positions will always give us zero gains- it is a zero sum game. However, after considering transactions costs, both sides can expect a loss. Who always wins? The brokers and the exchange.