A Strategic Approach to Financial Options

Wilfried Siebe, Hellmuth Milde, Udo Broll and Volker Bieta

No 01/06, Dresden Discussion Paper Series in Economics from Technische Universität Dresden, Faculty of Business and Economics, Department of Economics

Abstract: To explain the strategic dimension in pricing options, it will be helpful to go back to the heart of the idea behind the concept of an option: options open up the possibility to postpone current decisions to a future point of time. Because of this flexibility additional information and new experiences can be taken into consideration. There are advantages and benefits resulting from this flexibility. The value of the option with the probabilities of the states of nature occurring. These probabilities will turn out the strategic decision variables of a new player as explained in the paper.

Keywords: Financial Option; Real Option; Option Premium Game (search for similar items in EconPapers)
JEL-codes: C7 G12 (search for similar items in EconPapers)
Date: 2006
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