What is the price theory of possibilities?
Price theory, also known as a model of options of options, is any theory that seeks to determine the right valuation of the possibility. In general, the choice is an agreement that gives the owner the right to buy or sell security or other real estate for a predetermined amount over a period of time. Since the possibilities are widely traded through exchanges, determining the right price for the options for traders is a desirable goal. Given that the possibility extends the time to which it is agreed at the time of its sale, it is important that the values of the possibilities are accurate and fair during this period. Any model that attempts to set accurate prices of options, using all available information, is the theory of options. There are two types of options known as Call and Put Options. Call options give the buyer the right to buy a property at a specified price all the time, so the buyer will increase the value. Insert options to provide the buyer the opportunity to sell the property for agreed CENU, so the buyer bet that the property will decrease. Therefore, in order to reach a fair valuation of possibilities, any prices theory will have to take into account the past information about the property, as well as current prices, probably the future performance and the time for which the choice lasts.
Each type of option price theory is a complex mathematical operation that includes these past, contemporary and future indicators, along with some others, depending on the theory. The most commonly used price theory is known as the Black-Sholes model, developed by Fisher Black and Myron Sholes at the age of 70. Many traders are reliable on the Black-Sholes model. Sholes and other contributors to the Robert Merton model won the Nobel Prize in Economic Science in 19 years 90 for their work on theory. Sometimes it is criticized for a severe relying on the previous performance, its complexity and the fact that this is not particularly useful for the possibilities with long periodsI, which are not traded.
The Binomial Lattice model, or a model of binomial possibilities, is another type of option theory of options. Some prefer it because they take more factors than a black table model. Perhaps because of its record of past use, black cuts remain the most used price theory.