EC4024 Lectures14 and15 Options and Derivatives

This document discusses options, futures, and derivatives. It defines an option as a financial product that gives the holder the right but not the obligation to buy or sell an underlying asset at a predetermined price. Derivatives are financial instruments that derive their value from the prices of underlying assets like stocks, bonds, currencies, or commodities, and they serve as risk management tools. Common types of derivatives are options and futures. A financial contract is considered a derivative if its value at expiration is determined by the market price of the underlying asset.