Evaluation of chooser option evidence from Alibaba

Abstract

Due to the financial market’s globalization, it has resulted in the growingly fierce competition and the international financial system’s volatility in current financial market. This implies that it is growingly necessary to analyze the financial derivatives market’s trend. To assess chooser option, Alibaba is selected. The way of trading a majority of the exotic options is generally determined by the financial organizations based on the customers’ specific demands. Exotic options have three common types which are respectively lookback options, chooser options and binary options. In this proposed study, the Brown Motion Theory can be used to determine the prices of assets through applying Geometric Brownian Motion to simulate the prices of Alibaba’s financial assets in order to calculate the financial assets’ future value. This study offers valuable insights with both financial institutions and investors respectively creating more proper exotic options and making more appropriate investment decisions.