Options and Option Strategies: Theory and Empirical Results

Cheng Few Lee

Chapter 83 in Handbook of Financial Econometrics, Mathematics, Statistics, and Machine Learning:(In 4 Volumes), 2020, pp 2839-2884 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter aims to establish a basic knowledge of options and the markets in which they are traded. It begins with the most common types of options, calls, and puts, explaining their general characteristics and discussing the institutions where they are traded. In addition, the concepts relevant to the new types of options on indexes and futures are introduced. The next focus is the basic pricing relationship between puts and calls, known as put–call parity. The final study concerns how options can be used as investment tools. Alternative option strategies theory has been presented. Excel is used to demonstrate how different option strategies can be executed.

Keywords: Financial Econometrics; Financial Mathematics; Financial Statistics; Financial Technology; Machine Learning; Covariance Regression; Cluster Effect; Option Bound; Dynamic Capital Budgeting; Big Data (search for similar items in EconPapers)
JEL-codes: C01 C1 G32 (search for similar items in EconPapers)
Date: 2020
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