Strike price

What are the factors affecting the prices of options? Explain the assumptions in the Black-Scholes model. In order to understand the factors that affect the prices of options, we need to understand what options are and how they work. Options are derivative assets. According to a California-based company called Optionetics (website: www.optionetics.com), "options are the most versatile trading instruments ever invented". This means, that you aren 't limited to making a profit only when the market goes up, you can also make money when the market goes down or even sideways. Since options cost less than stock, they provide a high leverage approach to trading that can significantly limit the overall risk of a trade or provide additional income. When you are controlling 100 shares with one contract, it does not take much of a price movement to generate substantial profits. There are two functions that options are used for: to speculate, which is a highly risky practice where the big money is made and lost; and to hedge in order to reduce the risk of holding an asset. The basic approach of hedging is to create a financial position in risk factors that are negatively correlated with the core value of the firm. For instance, a firm may…

pricing model in the world. The model was first founded by Fischer Black and Myron Scholes in their 1973 and was further developed by Robert Merton who expanded the mathematical understanding of the options price model. In order to honor their contributions in finance, they were awarded the 1997 Nobel Price in Economics. People have been trading stock options for a long period of time, and the Black-Scholes model has finally set up an analytical framework for how to value an option. It is no…

Why is the digital price almost half of the print price? - To provide customers with a choice, The New York Times(NYT) offered one week print subscription for $15.40, while offering unlimited digital access for $ 8.75. The low setup costs of digital version enabled NYT to price it low and the high (52%) production and distribution costs of print forced NYT to charge a premium amount. This difference in price arose from the fact that company could afford to decrease the print circulation, thereby…

Anything along the lines of housekeeping is who I am marketing to. As long as you have a door and housekeeping, you are include in our market niche. I am aware that the more specific you get about your targeted market the more accurate your sales and market efforts will be, but my company can satisfy the needs of a low cost hotel to luxurious hotel. The goal is to start off small, I would like to see how well sales do with a smaller and less expensive hotel then if it works or even if it doesn’t…

concerning the Zero Price Effect Relationship between demand and price has been studied for years by many academics and can be explained by the law of demand. The law of demand states that all else being equal, as the price of a good rises, the quantity demanded falls (xxx). However, there is a special case when the price of a good is 0 as people do not simply subtract costs from benefits. This phenomenon is called the zero price effect which explains the case of people perceiving the benefits…

consumers start waiting for their favorite brands to reduce prices. And they purchase the cheapest available product. But in a highly competitive marketplace, store owners can’t rely on pricing to differentiate them from their competitors. It will halt growth, and monthly recurring revenue will shrink. “If you compete on price someone will always be willing to go lower and at the same time you are ruining your chances of being able to grow your business. With tiny margins there won’t be any…

Q1. The existing cost system in the Cambridge University network is step-down cost system that allocates overhead to support cost centers and service cost centers. By considering cost drivers such as FTE’S, sq. footage, they calculate the rate for each cost center and then allocate the cost. This method, emphasizing on the amount charged for a procedure, provides the clear aggregate cost information in the unit of department or cost center and suitable for cost-based reimbursement system.…

on paying college scholar mentors in the range of $12 to $14 dollars per hour. I then factored in the expense for travel and professional development which I will stay in the range of $2,000 to $5,000 per year over the next three years. I then factored in the price for office and computer supplies. I planned on spending more on office supplies my first year and then decrease yearly but I plan to update technology aggressively every three years to keep up with the technology movement. I then…

can be reduced; it certainly cannot be eliminated because not having stock can produce a loss in clients, brand recognition, and future sells. The supply chain is a process that is not always as expected, it can present unexpected events and in the view of the customer, is more competitive and every failure (for minimum that it can be) can produce a competitive loss. That’s why the stock cannot be eliminated; though can be reduced as the statics show. This shift can benefit the operations of…

quantity customers are willing and able to purchase” (Shah, 2017)1, looking at the price elasticity of demand determines how much a product is priced and how responsive demand is to the change of that price. For example, 500 people will be willing to pay £15 for a concert ticket, however if the price of the ticket was increased to £25, then only 250 people would be willing to pay. This can be shown using a demand curve, which is based upon the principle that if the price of a product increases,…