FMI Madura C14
FMI Madura C14
FMI Madura C14
Based on
Financial Institutions and Markets (9ed)
Jeff Madura
Taught by
Nguyen Thang
FPT School of Business (FSB)
Original Slides by
South-Western/Cengage Learning
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
14
Options Markets
Chapter Objectives
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2 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Background on Options
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Background on Options
b. Market-Makers
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Background on Options
3. Types of Orders
a. Online Trading
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
5 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Speculating with Stock Options
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
6 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Exhibit 14.2 Potential Gains or Losses on a Call Option:
Exercise Price = $115, Premium = $4
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
7 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Exhibit 14.6 Potential Gains or Losses on a Put Option:
Exercise Price = $110, Premium = $2
© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
8 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Determinants of Stock Option Premiums
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
9 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Determinants of Stock Option Premiums
© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
10 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Hedging with Stock Options
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
11 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Options on ETFs and Stock Indexes
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
12 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Options on Futures Contracts
1. Speculating with Options on Futures
a. Speculation Based on an Expected Decline in Interest Rates
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Institutional Use of Options Markets
1. Options as Compensation
a. Distortion between Performance and Option Compensation
c. Backdating Options
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permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
14 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Globalization of Options Markets
© 2010 South-Western/Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.
15 © 2010 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as
permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.