A STRATEGIC APPROACH TO FINANCIAL OPTIONS

Authors

  • Volker Bieta Trier University
  • Udo Broll Dresden Technical University
  • Hellmuth Milde Trier University
  • Wilfried Siebe Rostock University

Keywords:

Financial option, game, option premium, real option.

Abstract

To explain the strategic dimension of option pricing, it would be useful to address the very concept of the option. Options allow postponing the decision to a future point of time. This flexibility gives an opportunity to account for additional information. The flexibility of decision-making has its advantages and benefits as well. The article analyses the problem of option pricing on the example of probable states of nature. The authors explain how these possible states change the strategic choice of the player.

 

References

Farnham, P. G., 2005, Economics for Managers, Pearson Education International, Upper Saddle River, New Jersey.

Howard, R.A., 1996, Options, in: Wise Choices: Decisions, Games, and Negotiations, eds. Zeckhauser. R. J., R. L. Keeney, and J. K. Sebenius, Harvard Business School Press, Boston MA, 81-101.

Keat, P. G. and P. K. Young, 2003, Managerial Economics: Economic Tools for Today’s Decision Makers, fourth edition, Pearson Education International, Upper Saddle River, New Jersey.

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Published

25.10.2017

How to Cite

Bieta, Volker, et al. “A STRATEGIC APPROACH TO FINANCIAL OPTIONS”. Journal of European Economy, vol. 5, no. 1, Oct. 2017, pp. 52-60, https://jeej.wunu.edu.ua/index.php/enjee/article/view/948.

Issue

Vol. 5 No. 1 (2006): JOURNAL OF EUROPEAN ECONOMY

Section

FINANCIAL AND BANKING SERVICES MARKET

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