Option Theory

Pusan National University

Course Description

  • Course Name

    Option Theory

  • Host University

    Pusan National University

  • Location

    Busan, South Korea

  • Area of Study

    Finance, International Trade

  • Language Level

    Taught In English

  • Course Level Recommendations

    Upper

    ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.

    Hours & Credits

  • Host University Units

    3
  • Recommended U.S. Semester Credits
    0
  • Recommended U.S. Quarter Units
    0
  • Overview

    Course Objectives
    The goal of this course is introducing the basic concepts and the practical uses of options on various underlying assets such as stocks, stock indexes, bonds and foreign currencies. So, it will cover the definition of options as the starting point, valuing options, the trading and hedging strategies using options contracts and options markets. The focus of the course is understanding of the basic concepts of options, the relationships between options and their underlying assets or other derivatives, and option trading strategies for speculation or hedging.

    Course Description
    This course covers options, one of the most important financial instruments. At the end of this course, you will have enough knowledge of what are options, how they are traded and used for speculation or hedging, and how they are priced. Students best served by this course are those who either hold or expect to hold positions that require the use of derivatives. These include portfolio managers, bank treasury functions, asset liability and other risk managers, and traders.

    In details, we will learn the following contents.
    ① Basic concepts of options and option markets
    ② Mechanics of option markets
    ③ Properties of options: factors affecting option prices, put-call parity, implied volatilities, volatility smiles, etc
    ④ Option trading strategies
    ⑤ Option valuation method: binomial tree model and Black-Scholes option pricing model
    ⑥ Various types of options such as stock options, stock index options, currency options, futures options, interest rate options and exotic options

    Required textbook

    • Lecture notes edited by prof. Jin Woo Kim, 2018.
    • Fundamentals of Futures and Options Markets, 8th edition, John C. Hull, Pearson, 2013