More on Black and Scholes?
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The value d1 does not give the change in option value for a small change in asset price -- N(d1) does.\n\nIn general, the delta of an option is the first partial derivative of the pricing function with respect to the underlying asset price.  The delta is also called the hedge ratio.  If, for example, the delta of an option is 0.75, then for a small change in the value of an asset, the option will change about 3/4 of that value.\n\nThe Delta of a European Call Option is N(d1).
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Several years ago there was a commodity traded, maine potatoes.  Every year for something over two-dozen years, the price would go up in the middle of January through early February.  Information was not as free back then, I could track causes better today on the Internet.  So I had some money and practiced trading in corn, making a little bit while getting the ropes.  The target was this, the smallest increase was 8 cents a pound, 50,000 pound contracts.  I caught it on a down tick and felt like a surfer catching a wave.  Unfortunately, it was a tsunami.  There were several millionaires who had also spotted the trend and they thought they could buck it.  So the price went limit up, trading stopping after the first couple of minutes, doing this for a few days, then limit down, again stopping trading after a few minutes into the next trading day.  I got a margin call, but it was for more money than I had, so the brokerage confiscated my position.  When the dust settled, the price had indeed gone up as I antcipated, but I was trapped out, unable to profit from it.  For that matter I was paying off that debt to the brokerage firm for years, instead of paying off my mortgage, which is what would have happened if those guys hadn't been greedy.  Meanwhile, it bankrupted something upwards of 100 rich traders who had tried to turn the market, and sent something like 60 to prison.\n\nThis doesn't happen all the time.  Just be careful, you can lose more than you put in, although trading the option MAY limit that.  For instance, even in stock options, if you sell a naked option and things go against you and someone calls that option and you haven't had a covering option to cancel, you are on the hook for supplying the shares.  Be careful of trading too close to the expiration.  I remember positioning for one thing expected to go up, and by the time the events began driving it up, my option was close to expiring, I got almost nothing out of it.\n\nA good plan is a wonderful thing.  But with commodities and commodity options, there is still uncertainty, and definitely danger.
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http://finance.yahoo.com/q/bc?s=GBPUSD=X&t=2y
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Best Investment(s): Aquarius Platinum (AQP.L) - bought £5 worth last July via Halifax SHAREBUILDER (franchised from sharebuilder.com for the UK market)..... got as high as about 114% in profit before crashing back down to about 79% in profit.\nWOLFSON Microelectronics (WLF.L) - makes things like the sound chips used in the SONY PSP, XBOX360 + Video iPod. Stuck a tenner on them at the end of November '05. Currently +56.82% in profit, but that's only after they took a couple of big drops on Friday & Monday (28.00 on Monday).\n\nWorst Investment: Goshawk Insurance Holdings (GOS.L) - bought earlier this year as a bit of a dabble in "bottom fishing", appears they have de-listed. Bought 67.253522 in them for £5 (sharebuilder again)\n\nTinsley (Eliza) - TNL.L  Shares suspended since end of january due to company being put in administration (so much for making a huge profit on their low valued shares: 20.95123 for £5.\n\nD1 Oils (DOO.L) - one of my first investments early last year. The first I sold 'cos the value was going up & down like a prostitute's knickers on a good night. Was £5.12 in profit at the time, but only got 12p back after the commission fee was deducted.
119992
thestreet.com has an excellent article on Cramers advice. The contributor was showing how people get in trouble just blindly following his advice..like i did with bookham not taking the time to realize their quarterlyy report came out the next day. bummer...
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You may be able to find the answer here.....\n\nhttp://www.fool.co.uk/news/comment/2006/c060317e.htm?ref=foolwatch\n\nI know it's April 1st and the link includes the word fool, but it's not a wind up...it's a link to The Motley Fool, a really good financial advice site
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They should Clorox yahoo answers and get rid of the pervs lol. You should try their company website and look at forecasts and press releases. Also, investing info could be a good indicator.
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What exactly do you want to do?  If you want professional software there is a lot of stuff out there.  If you just want to mess around with option pricing stuff you can look at \n\nhttp://www.derivativesmodels.com/DerivativesModels/index.php - and here is a great bunch of free option pricing spreadsheets:\n\nhttp://www.global-derivatives.com/spreadsheets.php
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With all due respect - and it's wonderful to see someone so young who is managing so well - but I think you might be just a little bit mixed-up here.\n\nThe option, in this case a call, will have a B/A (bid/ask) spread.\n\nIf you were to enter an order to buy it, you could specify a price (a limit order) that would be less than the asked price, or you could enter a market order that might get filled at the ask price you see on your quote screen, or it might get filled at a higher price.  \n\nWhen trading options, I absolutely never, never enter market orders.  Why not?  "It's a license to steal."  There's nothing to prevent the MM from jacking the ask when he sees your order.\n\nHow to choose the limit price that will 1) be less than the ask and 2) will actually work so you can get the job done?  This is a bit of an art.  Get detailed quotes for everything, GOOG itself and options with strikes close to the one you're interested in.  Examine the sizing.  How many bidding, how many offering?  Is GOOG trending down this minute?  This day?\n\nWith respect to the option you're interested in, if there are 399 contracts bid and only 7 offered, and GOOG is trending up, you'll have to set your limit order closer to the ask to get the job done.  If the situation is reversed, you can come down in your limit price, closer to the bid - but why would you be buying at just that minute anyhow.\n\nLastly, don't want to rain on your parade, but please keep in mind that countless studies have shown that it's the buyers of naked options who are the ones that lose money.  It's the option sellers who make money, because they are selling time value.\n\nYour broker probably won't allow you to sell naked options.  You could do a spread combination, going long one option and short another option.  For example, in a calendar spread one would buy a call farther out in time and sell a near-term call which would be covered.  If the near-term expires out-of-the-money one then sells another near-term, and so on until one catches up with the long-term position.\n\nThere are countless variations and all this requires quite a lot of study first.  CBOE has a virtual option trading model, so you could play with virtual trading while you get the hang of things.\n\nWishing you great success.
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Unfortunately, I'll probably dealing primarily with stocks listed on American exchanges, I'll see if I can come up with a Toronto one.\n\nAltria (nee Phillip-Morris, MO) is a great stock to get because it's a solid tobacco company with some great brands (Marlboro) and they're just entering the smokeless tobacco market, which could be a huge payoff.  Also, this "light cigarette" class action hit the stock too much and I expect to see MO gap up in the future.  And they pay a 4.20% dividend.  It's hard not to like it.\n\nFor alcohol, the market seems to be going into liquor as opposed to beer these days, especially among the younger crowd (who tends to drink more).  This isn't strictly empirical, but I think going into a liquor company is a better bet.  For that, DEO is your best bet.  They have a great stock of brands (Morgan, J&B, Cuervo, Tanqueray) and are have some beer and wine brands (but their strength is far and away their liquor).  It's relatively cheap at 19.51 P/E and has a 3.90% dividend also.\n\nI don't know too much about weapons, but if you're into military stuff, Halliburton and even Boeing are sound investments.  Handguns, Smith and Wesson (SWHC) is the only one that comes to mind it's forward P/E seems a little high at 27.56 for manufactured goods in what seems to me a tight market, but there's not much industry data to go on (not very many handgun companies).  They're trading on the upper end of their 200dma so this stock could move upwards (and it's been trending up all year).  Analysts are bullish, so I'd say it's worth watching.\n\nFor gambling, you need to go where the money is, and that means what's hot.  No casino's hotter than Sands (LVS) which has exploded over the past year, but I'm worried that the money might have been made there.  It's the best casino stock out there, but it's the most expensive.  Casinos are still a good investment, but I'm thinking with concerns over the Democrats taking over (and the economic / legislative ramifications) you might want to go a little cheaper.  Harrah's (HET) is another good casino stock that's not so pricey as Sands.\n\nAs far as sex stuff, it's pretty hard for me to come up with a recommendation.  I'm sort of cold on the industry because a lot of it is privately held, and the public issues don't get coverage.  If somebody can come up with a good investment, I'd love to hear it, though.\n\nHowever, I'd be interested to know why you're interested in sin stocks.  As I touched on earlier, some people think a Democratic congress could hurt some of these companies (especially tobacco).  Maybe you're thinking these were irrationally factored into the price and that these stocks could jump up after the election?\n\nEdit:  Full disclosure.  The only stock listed that I own is MO.
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MSN.COM has information.  I did a graph of the Euro as an example.  However, most people who play with Forex lose money.  Watch out for the scammers. (See Link 3)
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See WorldCom and Enron....\nTraditional financial analysis overlooked the simple facts of financial analysis techniques...
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I'd suggest speaking to a stockbroker about costs etc, and the returns would depend on the performance of the company.  I think they're about £4 a share just now, and they performed very well last year.  I've thought about it too because Tesco seem to be taking over the world just now...!
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Black-Scholes theory is the theory underlying financial derivatives which involves stochastic calculus and assumes an uncorrelated log normal distribution of continuously varying prices. A simplified "binomial" version of the theory was subsequently developed by Sharpe et al. (1995) and Cox et al. (1979). It reproduces many results of the full-blown theory, and allows approximation of options for which analytic solutions are not known.\n\nMonteCarlo method: Any method which solves a problem by generating suitable random numbers and observing that fraction of the numbers obeying some property or properties. The method is useful for obtaining numerical solutions to problems which are too complicated to solve analytically. It was named by S. Ulam, who in 1946 became the first mathematician to dignify this approach with a name, in honor of a relative having a propensity to gamble. Nicolas Metropolis  also made important contributions to the development of such methods.\nThe most common application of the Monte Carlo method is Monte Carlo integration. \n\nMonte carlo integration: In order to integrate a function over a complicated domain D, Monte Carlo integration picks random points over some simple domain D^' which is a superset of D, checks whether each point is within D, and estimates the area of D (volume, n-dimensional content, etc.) as the area of D^' multiplied by the fraction of points falling within D. Monte Carlo integration is implemented in Mathematica  as NIntegrate[f, ..., Method->MonteCarlo].\n\ns
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For you to understand option pricing at more than a superficial level you will need a certain mathematical level.  Ideally you will have had calculus and will understand the basics of differential equations and how to solve them.\n\nAssuming this, there is a very good book by John Hull which is called "Options, Futures and Other Derivatives" which is very expensive new but which you can get used for probably $60 used.  It will be worth the money.\n\nThis is the only options book I ever read (an earlier edition) and I have been trading derivatives since the early 1990s.
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http://uk.finance.yahoo.com/q/cp?s=%5EFTSE
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The use of Black Scholes Merton is very popular for short-term European option pricing, but there are other models to choose from.  Black Scholes is part of a group of models known as a closed form group, because they are continuous functions (no breaks in the line).  It is very popular to use, because it is a straight forward equation and, once you carefully estimate the parameters, it is very easy to use.  A major flaw of BSM is that it is a non-linear approximation based on one of the equations found in Thermodynamics (I can't remember which one).  So the model does not hold for long-term options or for options that can be exercised at any time (i.e. American options).  \n\nAnother group of models, known as lattice models, have gained popularity.  The binomial model was developed at the same time as Black Scholes, but tackles the problem from a different route.  Binomial models say that a price can go up or down, and the result (very simplified) is a weighted average of probablilies and price movements in various scenarios.  The benefit of this model is that expected exercise date and expected volatility are OUTPUTS of the model, instead of inputs for Black Scholes.  This feature makes lattice models able to value American options and options on new companies (without significant operating history).\n\nOther models include iterative simulation techniques such as Monte Carlo.  This approach is similar to the Black Scholes model in that you input probability distributions and expected values for your value drivers.  The difference comes in the output, which is discrete as opposed to the continuous Black Scholes.  I know this stuff is technical, but if you are interested, there is a ton of research on all of these models.  Have fun.