Research on the Valuation of Chooser Options: Case of AAPL

Authors

  • Ziming Tian

Keywords:

exotic option, chooser option, valuation, interest rate, stock price

Abstract

The financial market is becoming increasingly sophisticated as the economy grows. Since the majority of investors are looking for the best investment to decrease risks and increase returns, the flexibility that chooser options offer is very appealing. This article provides a detailed analysis of the chooser options, emphasizing their significance and usefulness in financial markets. Since determining the precise value of options is relatively challenging, the essay involves both the qualitative and quantitative aspects of pricing chooser options, which implies a wide variety of applications in various market circumstances. Explanations in this article focus on how chooser options are applied in practice, including options’ essential properties, exotic options’ role in the financial markets, introduction to chooser options, and the valuation process. By using Monte-Carlo simulation, the paper investigates variables influencing the value of AAPL's chooser options. It aids in explaining how uncertainty and risks affect predicting and forecasting models by estimating the potential outcomes of an uncertain event. According to the calculations used in this article, Apple Inc.'s (AAPL) price is tightly connected with the selected period and less correlated with volatility and its strike price at one-year maturity. With chooser options, the investor has the discretion of deciding in advance if the option is a put or a call. In this way, this article contributes to the comprehension of investing choices.

References

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Published

2022-11-22

How to Cite

Tian, Z. (2022). Research on the Valuation of Chooser Options: Case of AAPL. BCP Business & Management, 32, 508–514. Retrieved from http://bcpublication.org/index.php/BM/article/view/2992