THEORETICAL VALUE AND FINANCIAL OPTIONS VALUATION METHODS

Financial markets have become more volatile in recent years, and firms actively seek for the ways to hedge their risk exposure. Among instruments developed to respond on volatile financial markets, financial options have important role. Financial options as derivates do not eliminate risk in absolute sense, but they transfer it to another party who is willing to bear it at a lower cost.

Options give holder the right, without strictly obligation, so their valuation can be complicated. Among various option valuation models (and other derivates), Black-Scholes model represents one of the most used.

Key words: option, portfolio, risk, valuation, model

JEL Classification: G32