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Share options and option pricing - Coggle Diagram
- Share options and option pricing
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Ex:1
If share price is $2.50 in 3 months time: then excercise the option. Pay $1.80 per share and immediately sell for $2.50
If share price is $1.50 in 3 months time: then do not excercise the option as you can buy them for $1.50
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Use of options
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buy 1M options *$0.40 = $400,000 pay now
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Then today I can sell the options (even if we don't own them) as long as we buy them back later (to ensure we make a profit)
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Delta hedge
Sell 1,000 shares/0.2451 = 4,080 call options
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