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A Strategic Approach to Financial Options

Author

Listed:
  • Siebe, Wilfried
  • Milde, Hellmuth
  • Broll, Udo
  • Bieta, Volker

Abstract

To explain the strategic dimension in pricing options, it will be helpful to go back to the heart of the idea behind the concept of an option: options open up the possibility to postpone current decisions to a future point of time. Because of this flexibility additional information and new experiences can be taken into consideration. There are advantages and benefits resulting from this flexibility. The value of the option with the probabilities of the states of nature occurring. These probabilities will turn out the strategic decision variables of a new player as explained in the paper.

Suggested Citation

  • Siebe, Wilfried & Milde, Hellmuth & Broll, Udo & Bieta, Volker, 2006. "A Strategic Approach to Financial Options," Dresden Discussion Paper Series in Economics 01/06, Technische Universität Dresden, Faculty of Business and Economics, Department of Economics.
  • Handle: RePEc:zbw:tuddps:0106
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    File URL: https://www.econstor.eu/bitstream/10419/22728/1/ddpe200601.pdf
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    More about this item

    Keywords

    Financial Option; Real Option; Option Premium Game;

    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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