Option pricing and types

Option pricing and types

Bachelor of Business Studies (BBS) — Fourth Year

Subject: Fundamentals of Investment (FIN 253)

Unit 11: Derivative Securities

Academic Year: 2083/84

Topic Objectives

After studying this topic, students should be able to:

• Explain the scope and key elements of option pricing and types.
• Apply the relevant financial concepts or calculations and explain their assumptions, risks and analytical limits.

Curriculum Scope

• Option pricing and trading: profit potential from puts and calls, intrinsic value
• Other types of options: stock-index option, options on exchange-traded funds, interest rate options, currency options, LEAPS

Detailed Microsyllabus

1. Option outcomes

   1. Exercise terms, intrinsic value and premium.
   2. Calculate put and call outcomes from supplied data.
   3. Distinguish payoff from net profit.

2. Other options

   1. Index and ETF options.
   2. Interest-rate and currency options.
   3. LEAPS within the course framework.

---

Curriculum reference: Tribhuvan University, Faculty of Management, revised four-year BBS curriculum, PDF pages 89–91.

Source note: The curriculum scope above is retained from the existing TU syllabus breakdown. The numbered study subtopics are editorial elaborations for teaching and study, rather than a separately issued TU syllabus. Unit or component allocations apply at their stated level; no separate topic hours or marks are assigned here. Examples involving current laws, rates, institutional products or Nepalese status must identify the relevant period and official materials; no changing numerical or legal requirements are invented here.