Stock Option Accouting?

[Linas Vepstas]

On Wed, Jun 25, 2003 at 04:24:57PM -0500, Dale Alspach was heard to remark:
> Actually stock options can be bought and sold. These are called derivatives
> and Black-Scholes modeling is a way to price them. (Nobel prizes in
> economics were awarded for this stuff.) This is rather

And the math is neat too.  I once read a paper on stoch diff eq. on
drill breakage as a function of drill speed and pressure, vs. lost time
in salary to change the bits, scraped boards, etc.  Seemed 
pretty obtuse, until the last graph, which showed a savings of
$10K to $20K a month  by changing the parms.   I guess that can 
pay for a resident mathematician on the assembly line ...

> specialized financial mathematics and I believe access to actual trading
> and pricing is very limited unless you work for one of the big investment firms.

You can trade 100's of options publically, you don't have to be a 
big investor. They're listed on the wall street journal,  traded
at the chicago board of options exchange.

-----
You know the story that black & scholes applied thier formula to all
of the options listed in the paper, and found a few that were way outta 
line?  They actually put money into it, and lost:  turns out that 
the two they invested in had just declared bankruptcy!   Turns out
'fundamentals' is sometimes important.

--linas


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