Abstract
Trading financial derivatives become more and more popular in the modern life. The investor wants to purchase the financial derivative to receive more benefits. However, Option is the important component in the financial derivatives. Compared with Futures, Option can let investor feel more convenance since it acts as the contract. This research analyzes the price of the Rainbow Option in the Stock market. The Stock market includes two companies which are Pfizer and Walmart. The results shows that the Rainbow Option should be priced between max of call options and the sum of the options. It can testify the theory of rainbow Options‘ price successfully. Based on this research, the investor can understand the background and process of the rainbow Options‘ working. Combine with the feature of the rainbow options, the investor can make the proper investment decision in the different situations.
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