Financial Markets (2011) with Robert Shiller 17. Options Markets
17. Options Markets Transcript and Lesson Notes
Financial Markets (2011) (ECON 252) After introducing the core terms and main ideas of options in the beginning of the lecture, Professor Shiller emphasizes two purposes of options, a theoretical and a behavioral purpose
Quick Summary
Financial Markets (2011) (ECON 252) After introducing the core terms and main ideas of options in the beginning of the lecture, Professor Shiller emphasizes two purposes of options, a theoretical and a behavioral purpose
Key Takeaways
- Review the core idea: Financial Markets (2011) (ECON 252) After introducing the core terms and main ideas of options in the beginning of the lecture, Professor Shiller emphasizes two purposes of options, a theoretical and a behavioral purpose
- Understand how Call option fits into 17. Options Markets.
- Understand how put option fits into 17. Options Markets.
- Understand how strike/exercise price fits into 17. Options Markets.
- Understand how American vs. European options fits into 17. Options Markets.
Key Concepts
Full Transcript
Financial Markets (2011) (ECON 252) After introducing the core terms and main ideas of options in the beginning of the lecture, Professor Shiller emphasizes two purposes of options, a theoretical and a behavioral purpose. Subsequently, he provides a graphical representation for the value of a call and a put option, and, in this context, addresses the put-call parity for European options. Within the framework of the Binomial Asset Pricing model, he derives the value of a call-option from the no-arbitrage-principle, and, as a continuous-time analogue to this formula, he presents the Black-Scholes Option Pricing formula. He contrasts implied volatility, as represented by the VIX index of the Chicago Board Options Exchange, which uses a different formula in the spirit of Black-Scholes, with the actual S&P Composite volatility from 1986 until 2010. Professor Shiller concludes the lecture with some thoughts about options on single-family homes that he launched with his colleagues of the Chicago Mercantile Exchange in 2006. 00:00 - Chapter 1. Examples of Options Markets and Core Terms 07:11 - Chapter 2. Purposes of Option Contracts 17:11 - Chapter 3. Quoted Prices of Options and the Role of Derivatives Markets 24:54 - Chapter 4. Call and Put Options and the Put-Call Parity 34:56 - Chapter 5. Boundaries on the Price of a Call Option 39:07 - Chapter 6. Pricing Options with the Binomial Asset Pricing Model 51:02 - Chapter 7. The Black-Scholes Option Pricing Formula 55:49 - Chapter 8. Implied Volatility - The VIX Index in Comparison to Actual Market Volatility 01:09:33 - Chapter 9. The Potential for Options in the Housing Market Complete course materials are available at the Yale Online website: online.yale.edu This course was recorded in Spring 2011.
Lesson FAQs
What is 17. Options Markets about?
Financial Markets (2011) (ECON 252) After introducing the core terms and main ideas of options in the beginning of the lecture, Professor Shiller emphasizes two purposes of options, a theoretical and a behavioral purpose
What key concepts are covered in this lesson?
The lesson covers Call option, put option, strike/exercise price, American vs. European options, maturity/exercise date.
What should I learn before 17. Options Markets?
Review the previous lessons in Financial Markets (2011) with Robert Shiller, then use the transcript and key concepts on this page to fill any gaps.
How can I practice after this lesson?
Practice by applying the main concepts: Call option, put option, strike/exercise price, American vs. European options.
Does this lesson include a transcript?
Yes. The full transcript is visible on this page in indexable HTML sections.
Is this lesson free?
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