The Standardization of Option Contracts and the Creation of the Options

question 120

True/False

The standardization of option contracts and the creation of the Options Clearing Corporation are two important results of the opening of the Chicago Board of Options Exchange.

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Definitions:

Vega

The response of option price to a change in the standard deviation of the underlying asset.

Option's Price

The price at which a specific derivative contract can be exercised, determined by factors like the underlying asset's price, time to expiration, and volatility.

Volatility

The rate at which the price of a security increases or decreases for a given set of returns.

Time Value

The idea that having money now is more valuable than having the same amount later on because of its ability to generate earnings over time.