OPT_SIMPLE_CHOOSER

OPT_SIMPLE_CHOOSER

Synopsis

OPT_SIMPLE_CHOOSER(call_put_flag,spot,strike,time1,time2,rate,cost_of_carry,volatility)

Description

OPT_SIMPLE_CHOOSER models the theoretical price of simple chooser options.

call_put_flag is 'c' or 'p' to indicate whether the option is a call or a put.

spot is the spot price of the underlying asset.

strike is the strike price at which the option is struck.

time1 is the time in years until the holder chooses a put or a call option.

time2 is the time in years until the chosen option expires.

rate is the annualized risk-free rate of interest.

cost_of_carry is the leakage in value of the underlying asset, for common stocks, this would be the dividend yield.

Examples