Abstract
In this chapter, I will examine option concepts by using options on IBM stock as our sample underlying asset. Table 2.1 displays the contract specifications for this option contract traded at the Chicago Board Options Exchange (CBOE). This allows one to either buy or sell 100 shares of IBM stock at or before a variety of expiration dates.
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Notes
This is the “big one”: Black, F. and Scholes M, “The Pricing of Options and Corporate Liabilities”. Journal of Political Economy, May–June 1973, pp. 637–59. While Black and Scholes got all the glory, Robert C. Merton of MIT was hot on the trail of solving the problem and barely missed out. See Merton, R. “Theory of Rational Option Pricing”. Bell Journal of Economics and Management Science, Spring 1973, pp.141–83
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© 1994 Palgrave Macmillan, a division of Macmillan Publishers Limited
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Tompkins, R. (1994). Basic Concepts In Options Pricing. In: Options Explained2. Finance and Capital Markets. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-13636-0_2
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DOI: https://doi.org/10.1007/978-1-349-13636-0_2
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