Option Pricing Method And Its Applications

An option is a contract agreement, as a kind of financial derivatives, option hedging,speculation and avoid market risk function, in the modern international financial marketis developing rapidly, has been widely used. This paper introduced the option of relatedknowledge, the option pricing theory; introduces various methods for option pricing;thoroughly on the specific application of the theory and method of option pricing inpractice.The first chapter of this paper mainly introduces the option related knowledge.Explained the "options"; option elements; be compared to financial option and realoption from the option characteristics and management value two aspects; begin fromdifferent aspects, the option pricing theory of the ideological connotation, development isdescribed; and track the status of recent year option at home and abroad.The second chapter at the same time, gives the main procedure option and optionpricing method of classification in detail on the pricing method of parsing options; finally,from the application, solution, continuous and discrete three different perspectives onOption Pricing with different methods to compare, analysis.The third chapter introduces the application of real option in four aspects, anddecision-making of enterprises in explain profound theories in simple language, meaningvery much. And also briefly describes the option pricing theory in china. Because of thereal option is better able to deal with uncertainty, contact product market and financialmarket trading opportunities, thinking method is more conducive to change the industrystructure, but also help to improve management decision-making etc. Therefore, ingeneral, the application of real option is more extensive and more important.