For listed options the Black-Scholes model can be directly applied for valuation and it is commonly used by practitioners for such a purpose. However, for options that are not explicitly stated but embedded as part of the condition of another instrument and thus implicit, a less direct method (incorporating the standard binomial model) is commonly used by practitioners. This mode [...]
The following points highlight the thirteen main aspects of options. The aspects are: 1. Calendar Spread 2. Calculation of Premium on Options 3. Intrinsic Value of an Option 4. In the Money, at the Money and Out of the Money Options 5. Time Value of Option 6. Types of Covered Call 7. Put-Call Ratio 8. Open Market 9. Liquidating Option [...]
A call option give the buyer the right but not the obligation to buy a given quantity of the underlying asset, a given price known as 'exercise price' or 'strike price' on or before a given future date called the 'maturity date' or 'expiry date'. A call option gives the buyer the right to buy a fixed number of shares/commodities [...]