Dr. Rob Fisette from Milliman will be giving a talk titled "Binomial Stock Option Pricing or Financial Math is Really Math"
When you hold a stock option, you really own a choice to buy or sell a particular stock at a particular price at a particular moment in time. If Stock A has a price of $60 today, then how valuable is the choice to buy it for $60 in six months? Option pricing studies the problem of valuing these choices. In this talk, I will explain some basic types of options, examine good (and bad) reasons for buying them, and explore some ways to start pricing them. This may involve using binomial probabilities (flipping coins!) and calculating an occasional expected value, but everything else you need will be provided in the talk.