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Visual Quantitative Finance: A New Look at Option Pricing, Risk Management, and Structured Securities
book

Visual Quantitative Finance: A New Look at Option Pricing, Risk Management, and Structured Securities

by Michael Lovelady
April 2013
Beginner content levelBeginner
336 pages
6h 40m
English
Pearson
Content preview from Visual Quantitative Finance: A New Look at Option Pricing, Risk Management, and Structured Securities

10. Option Investment Profiles

This chapter extends investment profiles to the four basic option variations:

• Long call options

• Short call options (also referred to as written call options)

• Long put options

• Short put options (also referred to as written put options)

Option investment profiles combine standard option profit diagrams with a probability distribution. To provide a comparison benchmark, the graphs also include the stock profit line to highlight the difference between the derivative and its underlying security. This chapter also begins the discussion on leverage and capital allocation, where the intent may not be as clear with options as it is with stocks, and where metrics need to be defined in the context of specific objectives. ...

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Publisher Resources

ISBN: 9780132929233Purchase book