I have been trying to keep my videos fairly short so that it is easier to concentrate when watching them, but unfortunately these pricing videos have been a bit longer than average. It is hard to pack in all of the information on pricing into five minutes.
hi Patrick , if you're only given the share prices of 4 months including this one and the risk free rate how do you know which amount to use an upside and downside
Hi, you have to calculate the volatility of the underlying and convert that into u and d. if sigma is the volatility and T is time to expiration, the formula is u = e^sigma*sqrt(T), then d =1/u
I hope this is helpful, unfortunately it is difficult to use mathematical notation in the youtube comments. I think I explained this formula in the last video on the binomial tree approach
Dear Patrick, How are you doing today? Always a pleasure to watch one of your videos and recall when I was once your student! :) Having said that, I was wondering why you didn't include the 'concept' of cash account when creating the replicating portfolio? Isn't it true that in reality, delta*S(up)-c(up) is actually equal to (-) an amount y of $ we have invested at the risk free rate? I am asking you this question because I was comparing your way and that of a Financial Engineering course which also uses a portfolio approach to price a call option at time t=0. I have checked on your book but I can't find nothing about 'cash account'. I would be very grateful if you could please elucidate this doubt that I have. Kindest Regards.
Hello Mr. Boyle, May i ask how do you treat in the equation call options that the down node is also in the money? I've bought two of your books, so far i'm in the middle of "derivatives for the trading floor" and i find it very helpful! Thanks.
Hi Patrick, may I know why you take 50$ as the underlying value and then you discount it? 50$ is the value at time 0, I cannot understand why we need to discount it. Thanks in advance
Wow, came across this oldie goldie - didn't know you dese types of videos - you've come a long way
Best lecture materials of all time :D!
I have been trying to keep my videos fairly short so that it is easier to concentrate when watching them, but unfortunately these pricing videos have been a bit longer than average. It is hard to pack in all of the information on pricing into five minutes.
Hey the more time you take , the greater the value!
We’ll take a break then come back to it, we don’t want you “shortening” any material 😉
people who cant concentrate, are not interested. i would have loved to have these videos more longer, as i would love to get more knowledge from you.
You can actually build minimal , potentially no risk portfolio’s. That is mind blowing and motivating:)
Hi Patrick, thanks for making these videos! They’re really clear and helpful, thanks !
Thanks Julia, I am really glad that you find them helpful.
thank you so much for this.
hi Patrick , if you're only given the share prices of 4 months including this one and the risk free rate how do you know which amount to use an upside and downside
Hi, you have to calculate the volatility of the underlying and convert that into u and d. if sigma is the volatility and T is time to expiration, the formula is u = e^sigma*sqrt(T), then d =1/u
I hope this is helpful, unfortunately it is difficult to use mathematical notation in the youtube comments. I think I explained this formula in the last video on the binomial tree approach
Dear Patrick,
How are you doing today? Always a pleasure to watch one of your videos and recall when I was once your student! :)
Having said that, I was wondering why you didn't include the 'concept' of cash account when creating the replicating portfolio? Isn't it true that in reality, delta*S(up)-c(up) is actually equal to (-) an amount y of $ we have invested at the risk free rate?
I am asking you this question because I was comparing your way and that of a Financial Engineering course which also uses a portfolio approach to price a call option at time t=0. I have checked on your book but I can't find nothing about 'cash account'.
I would be very grateful if you could please elucidate this doubt that I have.
Kindest Regards.
Hello Mr. Boyle,
May i ask how do you treat in the equation call options that the down node is also in the money?
I've bought two of your books, so far i'm in the middle of "derivatives for the trading floor" and i find it very helpful!
Thanks.
Hi Patrick, may I know why you take 50$ as the underlying value and then you discount it? 50$ is the value at time 0, I cannot understand why we need to discount it. Thanks in advance
I don't get how it is possible to hold a negative call option.
If you sell a Call you are short (negative). The buyer is long (positive)