OptionsKorrein Volders, Eckhart Vlaming, Ranford Paulina

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How big is the worldwide derivative market? A. $80 billion B. $800 billion C. $8 trillion D. $80 trillion

NL GDP: €600 billion (600,000,000,000) US GDP: $17 trillion (17,000,000,000,000)

Option - Importance

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ANSWER D!

The OTC market is even larger

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What are options

Pricing

Using options in practice

Option strategies◦ Covered call◦ Bull/Bear Spread◦ Straddle◦ Butterfly

Content

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Right, but not obligation, to buy or sell

For a specific price

At a pre-defined price

At a pre-defined date

A specified amount

What is an option?

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Call - right to buy an asset Put - right to sell an asset

A specific price: the premium Pre-defined price: The strike price Pre-defined date: expiration date

◦ usually the 3rd Friday of the month Amount: regular size is 100 per contract

Option – Terminology

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Call Option Long Write (Short)

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Put Option Long Write (Short)

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Option – Black and Scholes

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Break

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Next activities10 December Academy Options

Christmas Social Drink5 January Option Workgroup

7 January Academy Fundamental 2Christmas Dinner

14 January AcademySocial Drink

26 January Advanced Academy Think ETF

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*use excel

Excel Action

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Buy 100 stocks @30 Write 100 call options @32 (1 contract)

You receive the premium!

Goal: improving profit for small stock movements

Covered Call

-10

-5

0

5

10

15Covered Call

Profi

t

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Buy 1 call 32 Write 1 call 34

Goal: invest in a minor increase/decrease of a stock.

Bull Spread /Bear Spread

30 32 34 36

-6-4-20246

Bull Call Spread Options Strategy

Profi

t

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Buy 1 call 26 Buy 1 put 26 Goal: invest in a large stock movement

Straddle

20 23 26 29 32

-6-4-20246

StraddlePr

ofit

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Goal: invest in a specific stock price range

Buy 1 call 30Sell 2 calls 33Buy 1 call 36

Butterfly

27 29 31 33 35 37 39

-1.5-1

-0.50

0.51

1.52

2.5Butterfly

Profi

t

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Merry christmas

K Thx Bye