Options And Options Trading - A Simplified Course (2004).pdf - Options Trading Collection - Ryjufka

OPTIONS AND

OPTIONS TRADING

A Simpliﬁed Course that

Takes You from Coin Tosses

to Black-Scholes

ROBERT W. WARD

McGraw-Hill

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DOI : 10.1036/0071442979

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CONTENTS

Foreword vii

Preface On Taking Risk and Blowing Up xi

PART ONE

THE BASICS

Chapter 1

What a Derivative Is and What It Isn’t 3

Chapter 2

Binomials and Coin Tosses 31

Chapter 3

Pascal’s Triangle and the Binomial Theorem 47

Chapter 4

Distributions Are the Key—What Are Distributions? 59

Chapter 5

Probabilities, Odds, and Payoffs 73

Chapter 6

Writing Our First Option 85

Chapter 7

Sectors, Strike Prices, and Summation Signs 97

Chapter 8

The Fair Price of an Option 109

iii

Contents

Chapter 9

Our First Stock Option: IBM 119

Chapter 10

Statistics: The 15-Minute Cram Course 135

Chapter 11

Dow Jones versus Coin Tosses 145

Chapter 12

Turning Spot Prices into Forward Prices: S

e RT

159

PART TWO

THE FORMULA

Chapter 13

Skeleton for an Option Formula 181

Chapter 14

Getting Comfortable with the Black-Scholes Formula 195

Chapter 15

Introducing Volatility and SKIT-V 203

Chapter 16

Pros and Cons of the Black-Scholes Formula 209

PART THREE

TRADING

Chapter 17

A Primer on Risk and Hedging 223

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