Option Pricing Fundamentals gives financial professionals the fundamental knowledge theyneed for accurate and profitable option pricing. Using options on interest rates and optionsembedded in fixed-income securities as examples, it introduces both the binomial and theBlack-Scholes pricing models as it explores how changes in market variables affect optionpremiums. The focus is on option pricing as opposed to actual hedging strategies, with topicsincluding time value versus intrinsic value; hedging techniques; characteristics of positions thatare in-, out-of-, or at-the-money; and techniques for buying and selling naked options. Intuitiveand in-depth, Option Pricing Fundamentals will give readers the knowledge they need tounderstand and describe basic option types; understand the costs, benefits, and risks of popularoption positions; and identify key factors that affect the price of an option