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Analysis of the Option Strategies Choice

Student: Daria Smirnova

Supervisor: Anna Novak

Faculty: Faculty of Economics

Educational Programme: Economics (Bachelor)

Year of Graduation: 2020

The aim of the present study is to systematize the known criteria for the best choice of strike options when solving a number of problems, and to demonstrate the importance of choosing the optimal strike under given conditions. Calculations and data analysis were performed in the development using MS Excel. We plan to test the hypothesis that if there is information about the future distribution of the price of the underlying asset, it is possible to optimize the choice of strike in order to get the maximum return on invested funds. The first part of the paper gives an overview of the existing criteria for choosing options and ways to optimize the choice. The second part of the paper discusses the ways to optimize the choice of option strikes for solving various problems if there is information about the distribution of the price of the underlying asset in the future. Moreover, an economic rationale is given for the optimal choice of an option strike when solving the problem of speculative transactions. Key words: options, optimal strike, financial markets, derivatives.

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