12
Options
Insurance using a stock and a long put
File: MFMaths3e_12.xls
DESCRIPTION
Options are instruments in some ways similar to futures in that they allow risk to be controlled and traded through dedicated exchanges. An option is a right rather than obligation, so unlike a future you can allow the contract to lapse if there is no gain. This ability to ‘walk away’ has proved very attractive as part of an overall risk strategy. From early beginnings with the establishment of the Chicago Board Options Exchange (CBOE) in 1973, the volume ...
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