LESSON ONE WHAT PLANTS NEED To grow satisfactorily a plant needs warmth light, water, carbon dioxide and about a dozen other chemical elements which it can obtain from the soil. WARMTH Most crop plants in this country start growing when the average daily temperature is above 6C(42F). Growth is best between 16C(60F)and 27C(80F). These temperatures apply to thermometer readings taken in the shade
Example AFI has SOLD for $300,000 a European call on 100,000 shares of a non-dividend paying stock: S 0 =49 =50 r=5%=20% μ=13% T =20 weeks The Black-Scholes value of the option is $240,000 How does the Fl hedge its risk?
The stock Price Assumption Consider a stock whose price is s In a short period of time of length At the change in then stock price S is assumed to be normal with mean Sdt and standard deviation os√△, that is, S follows geometric Brownian motion ds=u Sdt+oSdz Then dInS=( )dt+oda
A Simple Binomial Model of Stock Price Movements In a binomial model, the stock price at the BEGINNING of period can lead to only 2 stock prices at the END of that period
Three Alternative Strategies · Take position in: -the option and the underlying -2 or more options of the same type This is known as spread -a mixture of calls and puts This is known as a combination