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In this chapter, we first introduce the basic concepts of call and put options. Then we show how the simple one period binominal call option pricing model can be derived. Finally, we show how a generalized binominal option pricing model can be derived.
In this chapter we introduce different types of options and their characteristics. Then, we develop put-call parity theorems for European, American, and futures options. Finally, we discuss option strategies and their investment applications.
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