A course in equity valuation would look at fundamental drivers of corporate valuations. In this video we will show how Option valuation depends on various inputs, including the price of the underlying. A long call gives a long position in the underlying. This means that the value of a long call position would increase as the price of the underlying goes up. Value of an option is dependent on a number of factors, including the price and volatility of the option. Call options with lower strikes are worth more and for put options, those with higher strikes will be worth more. Value is more likely to be exercised if it is deep in the money - that is, the underlying price is high.
Key learning objectives:
Explain Options drivers.
Define Long Positions in Derivatives
Explain the price movements of options contracts
Introduction to Interest Rate Swaps and Use Cases
David Leeming • 17:58