Pricing of Call Options According to the Black Model
Keywords:
options, black, stocksAbstract
The global economy is entering a new, more complex phase, which is called the era of globalization - loaded and affected by a set of global financial and economic variables that had, still and will continue to have a radical and profound impact on the performance and work of financial institutions of all kinds and classification's, from the perspective that financial institutions play a vital role in economic activity. . In addition, the multiplicity of activities and works of financial institutions made them face modern risks that they did not face before. The risk of stock price fluctuations and credit risk is still a concern of every financial institution; As it is closely related to the main function of the majority of financial institutions, which is credit, despite the economic reforms and protocols established by international bodies; However, the work of these institutions is still exposed to the risk of fluctuations in the price of their shares. On this basis, the study came to shed light on the most prominent tools for managing stock price risk and hedging it, which are options contracts, and revealing their hedging effectiveness in terms of risk and return for the user of these contracts in hedging the risk of stock price fluctuations.
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