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August 16, 2020 at 11:21 am
Just wanted to say, John is an exceptional lecturer. I’ve been using a paid online course provider to this point and there’s a massive difference in the standard of lecturer. John goes through the content at the perfect pace and references problems in the first person which I find brilliant. A job very well done, very much appreciated, actually enjoying studying again. Thank you very much!!
John Moffat says
August 16, 2020 at 3:44 pm
Thank you very much for your comment 🙂
July 28, 2020 at 12:30 pm
Dear John, Thank you very much for the lecture. I want to understand one moment about the Delta Hedge. If the price goes down, it will work. But if the price goes up, the option price also goes up, and I’ll have to buy them later at a higher price to close the deal. So how can I be sure that I’ll make a profit in this case?
July 28, 2020 at 1:05 pm
The options hedge the risk.
So if the share price goes down then the loss is cancelled out by the profit on the options. If the share price goes up then the profit is cancelled out by the loss on the options. So the end result is you are not affected by changes in the share price whatever happens to the price.
May 30, 2020 at 1:20 pm
Why do we divide number of shares by N(d1) to calculate number of options in example 5? I don’t get the idea behind it.
May 30, 2020 at 11:03 am
Is Dark pool trading system not covered in any of your lectures ?
March 10, 2020 at 3:23 pm
Dear Sir, please advise how can we assess a volatility of a new project, in order to apply the real option model based on Black-Scholes? Thank you in advance for your answer!
March 10, 2020 at 7:08 pm
The question will tell you the volatility 🙂
February 16, 2020 at 10:04 pm
Who do we calculate the number of put options to buy or sell ? do we use the same N(d1) used for call options ?
February 17, 2020 at 5:32 am
January 23, 2020 at 9:00 pm
sir, for the theory aspect, does the company have to make sure it has enough options available on hand to mitigate the risk? how does it determine the right amount of options for shield it from any exceptional circumstances, etc, if it doesnt have enough to cancel out, does this effectively result in a loss in shareholder value (as investors may possibly want to know the risk attitude of a company)
January 24, 2020 at 7:44 am
It is investors, not the company, who may choose to use options as a way of reducing the risk to them of changes in the share price.
May 26, 2019 at 4:53 pm
Hey John. I wanted to ask that do we also have to assume the fall in share price like you’ve done in example 5 . Pa falls 10cents . So will this be given in exam or we just have to assume?? Kind Regards.
May 27, 2019 at 12:53 pm
I don’t assume any fall in the share price in answering what example 5 requires, and neither would you need to in the exam.
I only mention what happens if the share price falls by 10c in order to explain the logic behind a delta hedge. It is awful at this level of exam to simply learn a rule without understanding the idea behind it 🙂
April 25, 2019 at 8:10 pm
I would like to know if you have covered “equity holders having a call option with FV of debt as exercise price” concept as this concept is a bit tricky to understand.
October 9, 2018 at 6:45 pm
Sorry! I am really confused right now. Why can you sell more call options than you own shares? When you sell the call options doesn’t that mean the person you sell them to has the right to buy the shares you are selling when the exercise time hits?
October 9, 2018 at 7:15 pm
Buying and selling options is a completely separate transaction from buying and selling shares. Options are traded on the stock exchange and you can buy and sell them just as you can buy and sell shares. Although an option is the right to buy shares, you don’t have to exercise the option – if you have bought an option then later you can sell the option. The person you sell it the option to does have the right to buy shares if they want, but they do not buy the shares from you – they buy them from the option dealer.
October 9, 2018 at 7:21 pm
Hmm, But then based on Example 5, the delta hedge Martin does to sell 4k call options that is an additional call option he owns on top of the 1000 shares?
October 10, 2018 at 7:20 am
No – as I explain in the lectures, you can sell options and then buy back later (just like you can sell shares that you don’t own, provided that you buy them back later)
silvana berdufi says
September 1, 2018 at 10:10 am
First of all thank you so much for your very useful lectures :). In case of a put option how we calculate the Delta Hedge?!
Thank you in advance.
September 1, 2018 at 3:28 pm
If in an exam question, you will be told how to 🙂
February 16, 2020 at 9:42 pm
does this mean that N(d1) is like a constant?
No – you get it from the tables provided, as explained in the lecture.
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