Hi John, example 3 call option i understand the answer been the price you will pay to buy the share should you excercise the call option. Put option is the right to sell, which is at 14.96cents. You explained that you understand why it is less. May you please explain.

This explanation is perfect. I struggled trying to figure out how to find out the Nd and realised there could be a lecture video on this in Open tuition. Thank you sir! I’m currently self studying and this was very helpful.

‘e’ is a constant (like Pi), and you need a scientific calculator with ‘e’ on it.

It is e^(- 0.03) that is equal to 0.9704. Depending on your calculator is might be easier for you to calculate it as 1 / (e^0.03), which is the same thing.

Hi John, the answer for Example 4b in chapter 13 seems to be missing and I seem to be getting a minus (-321.57 cents). Is that correct or have I done something wrong?

phetsoc says

Hi John

I am struggling with getting the 0.07 for d1 calculation, i keep getting 0.22

phetsoc says

I managed, thanks

John Moffat says

Great 馃檪

sindi2012 says

Hi John, example 3 call option i understand the answer been the price you will pay to buy the share should you excercise the call option. Put option is the right to sell, which is at 14.96cents. You explained that you understand why it is less. May you please explain.

bizuayehuy says

It is wonderful presentation for us who struggle as self study students!!!!!

John Moffat says

Thank you for your comment 馃檪

sindi2012 says

Hi Can you assist with getting 4b in example 4

karang says

Hi

How is log(290/260) is 0.1092 iam getting 0.047

Petronilla09 says

Hi John,

I’m battling with getting the answer for Call option. The e^-rt is my challenge. I got that of question 3 but having difficulty for this?

Is there a solution to work me through?

Petronilla09 says

My question is for number 4.

I got my answers d1 and d2 as – 0.6865 and – 0.8865 respectively.

Kindly put me through on the e for number 4.

John Moffat says

There is a printed answer in the lecture notes, as for all examples.

sxhawty says

This explanation is perfect. I struggled trying to figure out how to find out the Nd and realised there could be a lecture video on this in Open tuition. Thank you sir! I’m currently self studying and this was very helpful.

John Moffat says

Thank you for your comment 馃檪

rmundra says

Which key on the scientific calculator is e ?

John Moffat says

The one with ‘e’ printed on it. All scientific calculators should have an ‘e’ button.

rmundra says

Got it!

thank you so much

ankit9752 says

what is the answer of example 4 b because I am getting the negative put option value i.e

P=4 -150+(180*0.2)

= -110 cent approx…

John Moffat says

The answer is approximately 30 cents.

Using the put call parity formula, p = 4 – 150 + 180 x e^ (- (0.10 x 0.25))

= 4 – 150 + 180 / 1.0253 = 4 – 150 + 176 = 30

lusaibmtr says

How its getting .2828 for 0.40root 0.50

John Moffat says

The suare root of 0.5 is 0.7071. Multiply by 0.4 and you get 0.2828

SHIVAKIRAN says

Hi John,

In 3rd example: How did you arrive at e= 9704. Please help. Thanks!

John Moffat says

e does not equal 9704!

‘e’ is a constant (like Pi), and you need a scientific calculator with ‘e’ on it.

It is e^(- 0.03) that is equal to 0.9704. Depending on your calculator is might be easier for you to calculate it as 1 / (e^0.03), which is the same thing.

danique says

Hi, I’m not getting a negative for example 4 part a

danique says

I don’t know if I’m not calculating something correct but I’m still not getting the answer for example 4 part a

ln (150/180) + (0.1 + 0.5(0.4 squared) *0.25 is the number for?

njmb says

In(150/180) = -0.1823 (this is the negative value you get first)

you then add

[0.1+0.5(0.4squared)] *0.25 {equal 0.045}

Result is -0.1373

Divide by the denominator to get final d1 of -0.6866

Akua says

Hi John, the answer for Example 4b in chapter 13 seems to be missing and I seem to be getting a minus (-321.57 cents). Is that correct or have I done something wrong?

Akua says

Hi John, please ignore i think i have got it now, haha. it is 29.55 cents. Thanks

John Moffat says

No problem 馃檪