Options Markets - Introduction to Pricing, Exchanges, and Applications
Explore the world of options markets in this comprehensive lecture from Yale University's Financial Markets course. Delve into the essential nonlinearity options introduce to portfolio management, understanding contracts between buyers and writers, exercise prices, and dates. Learn about options pricing based on underlying asset price, volatility, and contract duration. Discover the famous Black-Scholes options pricing model and its significance in finance. Examine the role of options and futures exchanges in creating liquid and transparent markets. Investigate options beyond stocks, including their importance in real estate. The lecture covers options vocabulary, historical context, standardization, put-call parity, pricing models, volatility considerations, and risk management applications in home prices.