Options - Part 1

Options - Part 1

Overview

This tutorial will provide you with an insight into future asset pricing and volatility. This tutorial outlines the way in which prices can be 'enforced' by arbitrage possibilities.

Objective

On completion of this tutorial, you will be able to:
- Explain the basic components of drift and randomness
- Describe the idealised 'normal' distribution of returns and how this differs from reality
- Describe the idea of a probability distribution for the future price of an asset
- Calculate the historic volatility of an asset and explain the key differences between historic and implied volatility
- Explain when an option is 'in' or 'out' of the money
- Show how an option price is broken into its intrinsic value and time value
- Describe the major influences on option values
- Outline the upper and lower boundaries of option prices and explain the factors affecting the exercise decision
- Describe the 'put-call' parity relationship

Content

Module 1: Options - Future Asset Prices & Volatility
Topic 1: Drift & Randomness
Topic 2: Normal & Lognormal Distributions
Topic 3: Future Path Prices
Topic 4: Historical & Implied Volatility

Module 2: Options - Introduction to Option Valuation
Topic 1: Option Moneyness
Topic 2: Components of Option Value
Topic 3: Factors Affecting Option Value
Topic 4: Ongoing Position & Trade Management
Topic 5: Option Price Limits and Exercise Decisions

Details

Code
TEPDS17003101
Venue
ePlatform
Language
English
Level
Intermediate
Hours
SFC:2.5, PWMA:2.5
Fees
All Member: HK$700
Non-Member: HK$975
Staff of Corporate Member: HK$700