¶ … Valuation Project
Option Valuation
Value two call options, using two different option-pricing calculators, and/or pricing programs. The two calls you are to value are: Ticket Symbol (WFM)
The August 2014 $50.00 Whole Foods Call Option (50 is the Strike Price)
The January 2015 $50.00 Whole Foods Call Option (50 is the Strike Price)
The two models that were utilized are the Binomial and Black Scholes. The Binomial model is focused on looking at the option from a neutral perspective. This means that a series of valuations will be provided which are showing the potential prices movements. In this case of Whole Foods, the price of the stock must move up or down $1.10 to be able to realize a profit. ("Binomial Options Calculator," 2014) The Black Scholes model is designed to provide everyone with a better understanding of the possible valuations of the option. This takes place by looking at different types of options and the impact of the markets using the price. Under this model, it is indicating that the stock should realize volatility of at least 4.481. This means that the value of the options should reach these levels to realize significant gains. ("Binomial Options Calculator," 2014) ("Black Scholes Calculator," 2014)
The Monte Carlo is looking at the risk valuation for a position. In the case of Whole Foods, it shows that there is a 25.95% of...
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