Management and Organizational Studies 1023A/B Lecture Notes - Lecture 9: Futures Exchange, Bell Canada, Shortage

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 1023A/B
• Professor: Barry Hawn

Document Summary

Financial derivative securities: derive all or part of their value from another (underlying) security: derives values from something else eg. sto(cid:272)k (cid:448)alue o(cid:374)l(cid:455) has (cid:448)alue (cid:271)e(cid:272)ause . Why trade these indirect claims: expand investment opportunities - lower cost increase leverage - = buy one share or buy options to control shares. Call buyer expects the price of the underlying security to increase. Call seller expects the price of the underlying security to decrease or stay the same. Put buyer expects the price of the underlying security to decrease. Put seller expects the price of the underlying security to increase or stay the same. Possible courses of action: options may expire worthless, be exercised, or be sold prior to expiry, can sell to someone else at the time as well. If (cid:455)ou ha(cid:448)e it o(cid:396) do(cid:374)"t ha(cid:448)e it, it"s a naked call. Writer sells a call option for . 00 to you to purchase 1000 shares at . 00.