| 1. Option Valuation, Valuation of options, Option value | |
|
-Download template- |
With this template in Excel you can do option valuation. A option is a
derivative that gets its value based on the market value of an
underlying asset. Our template for valuation of options can be used to
compute a option value for both put options and call options. Option
valuation are not solely about computing a theoretical option value, it
is also important to compute other ratios as delta, gamma, vega,
theta and leverage. These ratios can be very valuable when trading with
options and they help you as an investor to take different positions
combining options with stocks. It is a much higher risk to trade with
options compare to trading in stocks. The theoretical option price consist of a intrinsic value and a time value, the time value decreases with passages of time. On the expiration day for a option the time value will be zero and the only value for the option consists of the intrinsic value. The intrinsic value is the stock price minus the strike price for the stock according to the option for call options, for put options it is the opposite. You can buy and sell both call options and sell options, when you buy an option you have the time value against you and when you sell an option you have the time value with you. When you buy an option you have to pay a premium and when you sell a option you recevie a premium. If you sell a option you have a constraint profit possibility and when you buy a option you have an infinite profit possibility. -Download template for option valuation- |
| 1. Historic Volatility, Volatility | |
|
-Download template- |
With this template in Excel you can compute
historic volatility for a stock. You need to have information about
volatility to be able to compute a option value. Historic volatility is a calculation of the average fluctuations in the stock price during a certain period. Historic volatility therby indicates the risk in a stock. The bigger fluctations a stock has the bigger risk is it in this stock. When you buy call options and put options it is good if the stock has high volatility because that gives a higher probabilty that the stock price is going to be higher or lower than the strike price before the expiration day. Sometimes they talk about implied volatility when talking about options. Implied volatility is the volatility that can be computed from the options market price. Implied volatility is thereby the volaltility that is estimated on the option market by the investors. -Download template for historic volatility- |
 |
|
Copyright
2006 © Ekonomiprogram.biz :
info@ekonomiprogram.biz |