OPTIONS: HISTORICAL OVERVIEW, FUNDAMENTAL TERMINOLOGY AND VALUATION TECHNIQUES
OPTIONS: HISTORICAL OVERVIEW, FUNDAMENTAL TERMINOLOGY AND VALUATION TECHNIQUES

Summary/Abstract: Since options are an important segment of the financial markets and economy in general, it is important to get a better understanding of them. This study will offer a deeper insight into the history and development of options and will explain the fundamental theory such as classification of options based on exercise style and payoff calculation. Also, it will conceptually describe valuation techniques that are commonly used to price American and European options (Black-Scholes-Merton Model and The General Monte Carlo Simulation) and their advantages and disadvantages. I believe that this paper will serve as guide for all those individuals who are interested in learning more about option trading and that it will equip them with necessary knowledge and skills.

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