Hugo Boss Case Study

survivals 4/3/2012 Option you have the choice to buy something for a certain cost but if the toll is less than that price forget about the set out. The most you ever pay is the contract price. You have the possibility of doing better. Nothing to discharge entirely gain since you locked in a certain price shareer of contract brook only do worse. The person whom makes the contract charges a price to enter into the contract, the seller keeps this contract. This price is called the premium, options start spiritedness with a value, it is an impure derivative.The underlying is instrument is what the contract is about person whom buys the contract Is known as the option buyer/investor, seller is known as the option writer/issuer, what you pay if you exercise the contract is known as the strike price or exercise price. Options have expiration days later that we back tooth not use them anymore, another parameter is the type of option that it is Six parameters Underwriting asset, p arties involved, strike price/exercise price, expiration date, type of option.The premium fluctuates with demand, the contract could be sold Underlying SBUX 1,000 Strike bell 60 a share 1 Month Type Call Premium 8 If you do not exercise the option it is allowed to expire Options come in types, Styles, and classes Put option right to sell at a certain price Put option Underlying sbx, 1000 shares, spot price 55 Strike price 50 Time 1 Month Premium in a put option you pay for the buy to sellOptions come in three styles European Style You can exercise on a certain date, only at expiration American Style You can exercise at any time, makes premium from an American option more but not by much only worth a lot more when dividends high dividends and low interest rate are present Bermuda Options specific dates when you can exercise them Pay off diagram 50 55 60 (exercise price) Starbucks pricePayoff 300 400 500 60 0 7010 8020 10040