Lec 23 -Year 2008 - Options Markets

Options Markets -Year 2008 Financial Markets (ECON 252) Options introduce an essential nonlineary into portfolio management. They are contracts between buyers and writers, who agree on exercise prices and dates at which the buyer can buy or sell the underlying (such as a stock). Options are priced based on the price and volatility of the underlying asset as well as the duration of the option contract. The Black-Scholes options pricing model is one of the most famous equations in finance and offers a useful first approximation for prices for option contracts. Options exchanges and futures exchanges both are involved in creating a liquid and transparent market for options. Options are not just for stocks; they are also important for other asset classes, such as real estate. 00:00 - Chapter 1. Options Vocabulary and the 1720 Stock Market Crash 14:58 - Chapter 2. The Standardization and Logic of Options: Options Exchanges 27:57 - Chapter 3. The Put-Call Parity Relation 36:32 - Chapter 4. Pricing an Option: The Black-Scholes Formula 51:35 - Chapter 5. Accounting for Volatility in the Black-Scholes Formula 01:00:08 - Chapter 6. Options on Home Prices as Risk Management Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses This course was recorded in Spring 2008.

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Lecture list for this course

Lec 1-Year 2008 Finance and Insurance as Powerful Forces in Our

Lec 2 -Year 2008 - The Universal Principle of Risk Management: Pooling

Lec 3 -Year 2008 - Technology and Invention in Finance

Lec 4 -Year 2008 - Portfolio Diversification and Supporting Financial

Lec 5 -Year 2008 - Insurance: The Archetypal Risk Management

Lec 6 -Year 2008 - Efficient Markets vs. Excess Volatility

Lec 7 -Year 2008 - Behavioral Finance: The Role of Psychology

Lec 8 -Year 2008 - Human Foibles, Fraud, Manipulation, and Regulation

Lec 9 -Year 2008 - Guest Lecture by David Swensen

Lec 10 -Year 2008 - Debt Markets: Term Structure

Lec 11 -Year 2008- Stocks

Lec 12 -Year 2008 - Real Estate Finance and its Vulnerability to Crisis

Lec 13 -Year 2008 - Banking: Successes and Failures

Lec 14 -Year 2008 - Guest Lecture by Andrew Redleaf

Lec 15 -Year 2008 - Guest Lecture by Carl Icahn

Lec 16 -Year 2008 - The Evolution and Perfection of Monetary Policy

Lec 17 -Year 2008 - Investment Banking and Secondary Markets

Lec 18 -Year 2008 - Professional Money Managers and Their Influence

Lec 19 -Year 2008 - Brokerage, ECNs, etc.

Lec 20 -Year 2008 - Guest Lecture by Stephen Schwarzman

Lec 21 -Year 2008 - Forwards and Futures

Lec 22 -Year 2008 - Stock Index, Oil and Other Futures Markets

Lec 24 -Year 2008 - Making It Work for Real People: The Democratization

Lec 25 -Year 2008 - Learning from and Responding to Financial Crisis I

Lec 26 -Year 2008 Learning from and Responding to Financial Crisis II