Options, Futures, and Other Derivatives

This is your golden guide into the world of derivative securities and the mathematical models that underpin them. The book focuses on key mathematical concepts like the Black-Scholes-Merton model, which provides a formula for pricing European call and put options. Hull explains the derivation of the Black-Scholes equation, detailing how variables such as the underlying asset price, strike price, time to expiration, risk-free interest rate, and volatility affect option pricing. He also explores the use of stochastic calculus and the role of Greeks in managing the risks associated with options portfolios. The chapters cover a range of topics, including binomial options pricing models, interest rate derivatives, and exotic options, providing readers with both theoretical foundations and practical applications. By offering rigorous mathematical explanations alongside real-world examples, this book equips readers with the quantitative tools needed to understand and navigate the complex field of derivatives