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1.4 Options: An Online Application

In this topic, you will learn how to interpret option information commonly reported in the financial press. Table 1.3 reproduces information in the form presented by Barrons Market Week, March 28, 1994.

If you are working at the computer you can click on any part of this table to learn how option price information is reported in the financial press.

Table 1.3

Reported Option Prices

After you are comfortable with the reporting of the option price information, you can experiment with the subject in Option Tutor titled Option Payoffs to see how you can combine options to create a variety of future payoffs. Notice that creating different payoffs costs different amounts, given the different option prices. A major part of this text is concerned with valuation. Next we provide an overview of the treatment of this problem in Option Valuation: An Overview.

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