option trading in future

Jun 28th, 2015
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A. T. Still University
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This paper derives pricing equations for European puts and calls on formgn exchange. The call and put pricing formulas are unhke the Black-Scholes equations for stock options in that there are two relevant interest rates, interest rates are stochastic, and boundary constraints differ. In ad&tion, it is shown that both American call and put options have values larger than their European counterparts.

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APPROVAL OF PROJECT SYNOPSIS20012-2013(SEMESTER IV)1. NAME: Sachit Shyamsunder Gupta2. ROLL NO. : 103. TITLE OF PROJECT :Study of Option Strategies Used In Derivative Markets4. SUBJECT AREA : Finance5. NAME OF GUIDE: Prof.6. SIGNATURE OF STUDENT :WITH DATE 7. SIGNATURE OF GUIDE: WITH DATE For Office use only Signature Date.Comments /Suggestions for reformulation of the Project.PROJECT PROPOSALPROJECT TITLE: 1.Study of Option Strategies Used In Derivative MarketsA. RATIONALE FOR THE STUDIESBusiness, like life, is inherently risky. Firms convert inputs such as labor, raw materials, and machines, into goods and services. A firm is profitable if the cost of what it produces exceeds the cost of the inputs. Prices can change, however, and what appears to be a profitable activity today may not be profitable tomorrow. Many instruments are available which permit firms to hedge various risks, ranging from commodity prices to weather. A firm which actively uses derivatives and other techniques to alter its risk and protect its profitability is engaging in risk management.Derivatives and its various types are now traded on exchanges throughout the world. In addition, huge volumes in all types of underlying assets are being traded in the over-the-counter market. A growing understand

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