Abstract
Options are an important tool in financial markets for managing and transmitting risk, while also providing investors with the opportunity to earn returns. This paper first introduces the basic concepts and characteristics of options, including the definition of an option, buyer and seller, strike price, and expiration date. Next, the differences between European and American options, and the characteristics of Asian and Brazilian options are discussed. Then, the development and extension of option valuation models, as well as their applicability and limitations, are discussed. In addition, the application and role of options in the financial markets are analyzed, as well as option trading strategies and practical examples. The risks and challenges of options trading are further discussed, as well as the concepts of speculation and arbitrage. Finally, suggestions and outlooks for options trading and risk management are presented, as well as an analysis of the current state of research and future trends in options valuation theory and applications.
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