11. Interest Rate Options

Frugal Finance offers a series of online courses covering various aspects of financial modeling and option pricing, with a focus on the Black-Scholes model and its uses. These courses provide real-world details into valuing options and managing risks in financial markets.

Black-Scholes Option Pricing Model

The Black-Scholes Option Pricing Model introduces the foundational ideas behind the model, explaining its assumptions and primary uses to European call options on dividend-free stocks. The course breaks down the Black-Scholes formula and its components, offering intuitive details into option pricing bounds.

Computing Black-Scholes Option Pricing demonstrates the real-world use of the model, guiding students using the computation of option prices using key parameters such as stock price, exercise price, and volatility. The course emphasizes the convergence of results between the Black-Scholes and binomial models, showcasing the model’s accuracy in option pricing.

Black-Scholes Put Option Pricing Model

The Black-Scholes Put Option Pricing Model looks at the adaptation of the Black-Scholes model for European put options, illustrating the computation of put option values using put-call parity. Students learn about the importance of cumulative distribution functions and symmetry in normal distributions for option pricing.

In Inputs for the Black-Scholes Model, the course discusses the key variables influencing the Black-Scholes option pricing model, emphasizing the importance of accurate inputs such as stock price, time to expiration, and volatility. Real-world procedures for estimating these inputs are provided, improving students’ understanding of option pricing.

Estimating the Stock’s Standard Deviation

In Estimating the Stock’s Standard Deviation looks into the details of determining stock volatility, a crucial input for the Black-Scholes model. The course looks at historical data analysis and implied volatility procedures, offering real-world examples and formulas for volatility estimation.

Implied Volatility

In Implied Volatility looks at the estimation of implied volatility, leveraging market data within the Black-Scholes model to infer standard deviation. The course discusses computational procedures and weighted implied standard deviations, providing details into option pricing accuracy.

The course further covers topics such as interest rate options, the Black model, and European bond options, offering real-world examples and discussions to improve students’ competence in option pricing and risk management tactics. Using these courses, students learn valuable skills and details into navigating financial markets effectively.