17. Options Markets

Financial Markets (2011) (ECON 252) After introducing the core terms and main ideas of options in the beginning of the lecture, Professor Shiller emphasizes two purposes of options, a theoretical and a behavioral purpose. Subsequently, he provides a graphical representation for the value of a call and a put option, and, in this context, addresses the putcall parity for European options. Within the framework of the Binomial Asset Pricing model, he derives the value of a calloption from the noarbitragepr