Finance
Create value under uncertainty
When uncertainty changes what a decision is worth, price the flexibility itself, using payoffs, volatility, contract terms and financing risk to make the sturdier choice.
Your learning route
The program order
Complete the programs in order to finish the route. Each one brings short lessons, applied practice and a realistic business case together.
Plus and Pro members can create a verifiable Stratify certificate when the route is complete.
- Program 01
Build the logic of option contracts
Intermediate: separate the right a call or a put buyer holds from the obligation its writer carries, and read what each contract pays at expiration. By the end of this program you can compute the payoff of a call or a put from the strike and the closing price, tell that payoff apart from the profit once the premium is taken out, and read a protective put and a collar as a floor and a ceiling on a position you already hold.
- Read a call and a put
Apply it: Closing case: choose the protection band
4 lessons · ≈3 hours
- Program 02
Calculate what flexibility is worth
Advanced: work out which of the six inputs move an option's value and in which direction, then price the flexibility itself by building the portfolio that copies the option's payoffs. By the end of this program you can read the direction of every input off the Black-Scholes formula, value a contract from its replicating portfolio, state the assumptions the formula rests on, and read a firm's own equity as a call written on its assets.
- Take the six inputs apart
- Read capital structure as an option
Apply it: Closing case: put a price on the flexibility
4 lessons · ≈4 hours
- Program 03
Manage financing risk with options
Advanced: find the option already written into an employee stock option grant, an all-share acquisition offer and a new debt issue, and price it with the same formula in all three. By the end of this program you can build a cost range for an option grant instead of a single figure, value the floor an acquirer guarantees, and derive the yield a risky bond must offer from the value of the equity claim.
- See what an option grant really costs
Apply it: Closing case: make the financing risk visible
4 lessons · ≈4 hours