Abstract
The investors search the financial instruments which contain least cost and reduced risk. As a recap, the financial instrument is negotiable contracts and they are two sorts, at the: • First, the traditional assets financials with that are negotiated in market of the stock exchange (shares, bonds, and the part in organism for collective investment in securities value …) or other cash instruments such as loans and deposits commercialize in the market; • Second, the derived financial product: there are two types of contracts, for the one a close position like (forwards, futures, swaps) and for the other one, the optional position likes options or warrants. So, all Islamic country observes that the option hasn’t legitimate in stock exchange and it has for originate most of the doctrine of Islam prohibit the transaction with all kinds of options,this implies a complete absence of options in the financial markets of Muslim countries and this context a random yield with in the money (ITM) of option equal zero.
Highlights
The intrinsic value of option is the difference between the price of exercise and the forward price
The residual value is the premium and the risk perceived in the case or the option is exercised before the term
The formula of Black and Sholes: the formula Black and Scholes was the first model used usually for the evaluation of option. This formula calculates a theoretical value for an option by using share prices, planned dividends, price of exercise, the planned interest rates, the time staying in the expiration and the planned volatility
Summary
The term "derivatives" is used to refer to a group of instruments that derive their value from some underlying commodity or market. Their popularity spread into Europe and throughout the world, and this led to a demand for tulip bulbs increased at a dramatic rate By this point in history, calls and puts were being used in many different markets, primarily for hedging purposes. Bans on options trading: Despite the bad name that options contracts had, they still held appeal for many investors This was largely down to the fact that they offered great leverage power, which is one of the reasons why they are so popular. In the late 19th century, Sage began creating calls and puts options that could be traded over the counter in the United States. More options exchanges were established around the world and the range of contracts that could be traded continued to grow. The options trading continues to grow in popularity and show no signs of slowing down
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