Concepts of Option Volatility, Option Valuations, Pricing Models and Trading Techniques for Options Explored in this In-Depth e-Learning Course.

DUBLIN, Ireland -- Research and Markets (http://www.researchandmarkets.com/reports/c30340) has announced the addition of e-Learning Course: Options to their offering.

Options are among the most versatile instruments in the derivatives market. Unlike many other derivatives, such as forwards and futures, options allow holders to 'walk away' from their position if the underlying market moves against them. This course covers the concepts of option volatility and option valuation, along with pricing models (including Black-Scholes, binomial and Monte Carlo models) and trading techniques for options. Option Greeks, the coefficients that explain how option values behave in relation to changes in market parameters and how to hedge some of the risks associated with options, are also described in detail.

In this course, you will explore:

--The concept of volatility as applied in options

--Option valuation techniques

--Various option pricing models 

--The Greeks

--Trading strategies with options

This course is designed for:

--New or recent recruits to the options desk

--Dealers/traders

--Portfolio managers

--Treasury department staff

--Sales and marketing executives

--Finance and accounting staff

--IT staff

--Compliance and regulatory staff

The following tutorials are included in this E-Learning course:

1. Volatility

The idea of volatility in finance is much like the common understanding of the term. Things are volatile when they are unpredictable. The more difficult element of volatility as it is used in option market pricing is that the volatility we really want is the one we cant see - the true volatility of prices in the future. Since we can't see what we want, we instead investigate historical volatility and implied volatilities for the future, which we can "read" from market options. This tutorial will help make these ideas real as a preparation for applying them in options.

2. Options - Introduction to Option Valuation

This tutorial presents the market conditions under which it is profitable to exercise an option and the payoffs to both the option buyer and option writer at the time of the option being exercised. It details the concept of option intrinsic value and moneyness, and establishes the upper and lower boundaries of the value of an option, before going on to consider the main factors that influence the value of an option.

3. Options - Pricing Models

This tutorial provides in-depth analysis of the Black-Scholes option pricing model developed by Fischer Black and Myron Scholes in 1973. This model can be used to price call and put options on a non-dividend paying stock. Several variations of the Black-Scholes model have also been developed to price options on futures, on foreign exchange and on stock with a known dividend yield. The tutorial presents the concept of the fair value of an option and applies the Black-Scholes model and its variations to a number of different situations.

4. Options - The Binomial Option Pricing Model 

The binomial option pricing model (BOPM) is a method of pricing options in which the underlying asset can assume one of only two possible, discrete values in the next time period for each value that it can take on in the preceding time period. This tutorial explains the BOPM in detail.

5. Options - Greeks

Five coefficients are used to help understand how option values behave in relation to changes in market parameters and how to hedge some of the risks associated with options. These coefficients are represented by the Greek letters delta, gamma, rho, theta and vega, and are called the option Greeks. This tutorial examines each of these coefficients in turn, explaining how they are calculated and providing practical examples of their use.

6. Options - Monte Carlo Simulation 

Options and other financial derivatives are becoming more complex. In response, the use of simulation methods to price them has become very popular. Monte Carlo simulation is a method often used to calculate the price of an option, particularly when a closed-form solution is not available. This tutorial examines the issues pertaining to the use of Monte Carlo simulations in pricing options.

7. Options - Trading Strategies

Options can be combined to create a variety of different patterns of payoffs, and this factor makes them an attractive proposition for many investors. This tutorial examines some of the more popular combinations of European options on a non-dividend paying stock. These include butterfly, bull call and calendar spreads.

8. Options - Managing an Option Portfolio

Option traders deal in multiple options rather than a single position, which means they are required to manage portfolios and cope with various risks associated with these portfolios. Consequently, option traders need to be aware of multidimensional changes in the market. This tutorial explains the role of an option market maker as opposed to a trader speculating on the market. The tutorial describes in detail how the initial exposure of an option trader is hedged and looks at ways of dynamically hedging market exposure over time. The tutorial also provides an overview of managing multiple exposures derived from the option portfolio.

For more information visit http://www.researchandmarkets.com/reports/c30340