Über die Autorin bzw. den Autor

JERRY MARLOW is a freelance financial writer and marketing consultant. For investment firms he creates marketing and educational presentations that bridge the gap between how sophisticated financial managers and the firms' clients think about investing. Marlow lives in New York City.

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"A joy to use. . . . [of] enormous value as a teaching tool for students, novice traders, and those who suddenly find themselves in need of a reference for option behavior."-Futures Magazine
 
"The animation is a good one. A deep insight into the price process pops out clearly. In my next semester course Black-Scholes Made Easy will be a useful tool for giving students the necessary intuitive view of the matter."-Professor Lucio Geronazzo, Mathematical Models for Financial Markets Il Dipartimento di Matematica per le Decisioni, Università degli Studi di Firenze
 
"[S]imply the best. It makes every part of Black-Scholes so understandable. I knew Black-Scholes' option pricing model was important and use it every day in my trading, but never knew why or how it worked. [This] book and CD-ROM provided me with a clear understanding of the model, and best of all, all I needed to understand the model was a basic mathematical background and some common sense."-Dong-Wook Kim, Futures & Options Trader Equity & Derivatives Team, Hanwha Securities Co., Ltd
 
In 1997, the Nobel Prize in Economics was awarded for the work that led to the development of Black-Scholes Options Pricing theory. Black-Scholes has become the dominant way of understanding and exploiting relationships among option prices, stock forecasts, and expected stock market volatility. Now, this accessible book and CD-ROM tutorial provides traders, investors, and finance students with an intuitive, interactive approach to understanding and using the Black-Scholes model.
 
Integrating text and interactive computer animations and simulations that are presented in a straightforward manner, Option Pricing: Black-Scholes Made Easy teaches you the fundamentals of option valuation and dramatically shortens the learning curve for mastering and applying the theory and its analytic capabilities. Here is a sophisticated way of thinking made available to those who do not have the background necessary to do Nobel Prize-winning mathematics. You will be able to understand easily and intuitively the concepts that drive the Black-Scholes model.
 
From making it easy for you to see and understand that "every financial forecast is a probability distribution" to tackling myths about options pricing, calculating options' expected returns, and providing a simple, low-risk options strategy, Option Pricing: Black-Scholes Made Easy demystifies this invaluable and profitable tool, shows you your investment odds, and teaches you how to take advantage of them.

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Option Pricing

John Wiley & Sons

Chapter One

To fill your computer screen with the animation, set your computer's screen resolution to 800 x 600. To run the animation in a window, set your computer's resolution higher.

Black-Scholes Made Easy runs on Windows at a screen resolution of 800 x 600.

If you want the animation to fill up the entire computer screen, set your screen resolution to 800 x 600.

If, while you're running the animation, you also want to see on-screen other software you have running, then set your screen resolution higher than 800 x 600.

If you know how to set the resolution of your computer, go ahead and do so. Otherwise, follow these steps:

1. To bring up the Windows menu, simultaneously press the Control (Ctrl) key and the Escape (Esc) key.

2. Roll your mouse cursor up to the Settings icon.

3. Click on Control Panel.

4. Double-click on the Display icon.

5. At the top of the selection, click on Settings.

6. Set the resolution to 800 x 600 or higher. (If your computer only supports a screen resolution of 640 x 480, you'll have to use the CD with a different computer.)

7. Click on OK.

8. Exit the Control Panel.

To run Black-Scholes Made Easy, double-click on BSMadeEasyFullScreen.exe or on BSMadeEasyInAWindow.exe.

1. Put the Black-Scholes Made Easy CD in the CD player of your computer.

2. Go into My Computer, Windows Explorer, or File Manager.

3. Find the CD. The CD should show up on your screen labeled JerryMarlow.

4. Click on the CD icon.

5. To run the animation full screen, double-click on BSMadeEasyFullScreen.exe.

To run the animation in a window, double-click on BSMadeEasyInAWindow.exe.

(To register as a user of Black-Scholes Made Easy, double-click on RegisterBlackScholesMadeEasy.htm. For links to the author's websites and e-mail address, double-click on StayInTouch.htm. For links to Tech Support, double-click on TechSupport.htm.)

If the screen resolution is set correctly, the first screen will look like one of the two on top.

The first screen that the animation lands on should look like one of the images on top.

If it does, great.

If, however, the first screen of the animation looks like the bottom image, then the resolution of your computer is set too low.

If the screen resolution is not set correctly, hit the Esc key on your keyboard. Go through the instructions for screen resolution on page 2.

After you accept the licensing agreement, the animation may take a minute or so to load.

To make the command buttons visible, roll the mouse cursor around on the screen.

Roll your mouse cursor around on the bottom and top left of the screen. You'll see command buttons appear when you roll over them.

Depending on what's going on on the screen, the functions of some command buttons may change.

1. To make the buttons disappear, click the Hide button three times.

If you want to ignore the tutorial and just start clicking on buttons, first read the section at the end of the book entitled: Navigating through the Animations.

Maybe you don't like to read and just want to click on buttons. Fine. If that's the case though, before you get started you may want to take a quick look at the section on navigating through the animations. It shows you the design principles that govern when and how things come up on screen. Your trial-and-error adventure will be less puzzling and messy.

To save and print pictures of the simulations, use Print Screen and Ctrl+V to copy and paste screen captures into other software. Include notes to yourself.

The animation does not provide a direct way to save or print pictures of the simulations you create on the screen. Nonetheless, you easily can use programs such as Word, PowerPoint, and Excel to save and print pictures of the simulations. You can use graphics software to prepare screen captures for display on the Web.

1. To capture an image of a simulation you have on your screen, press the Print Screen key on your keyboard. It's usually near the F12 key on the top right of your keyboard. It may be abbreviated Print Scrn or Prt Sc.

2. Use your mouse or press Alt+Tab to go to a Word, PowerPoint, or Excel document that you have open.

3. In your Word, PowerPoint, or Excel document, hold down the Ctrl key and press the V key (Ctrl+V).

4. If you wish to modify a screen capture or use it on a web site, instead of pasting it into a document program, use Ctrl+V to paste the screen capture onto a 800 x 600 canvas in an imaging program such as Adobe Photoshop, Macromedia Fireworks, or Microsoft Photo Editor or Paint. In these programs, you can save screen captures as .gif files and import them into your documents and web sites.

The screen includes a field in which you can type notes to yourself or to your lecture audience.

5. To get to the field in which you can type notes, keep hitting the Tab key on your keyboard until the cursor appears in the top middle of the screen.

(The message field appears on-screen only when you have other data fields on screen.)

(Continues...)

Excerpted from Option Pricingby Jerry Marlow Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.