Lesson 1: With call options, if the stock price goes above the option's strike price, you can make a lot of money. If it doesn't, you lose your entire investment.
Lesson 2: With put options, if the stock price goes below the option's strike price, you can make a lot of money. If it doesn't, you lose your entire investment.
Lesson 3: If we simulate lots of potential price paths and tabulate each final stock price with a little square, we can build a histogram. A histogram is a probability distribution.
Lesson 4: When we build a price-path histogram with the simulator, the shape of the histogram approximates a bell-shaped curve.
Lesson 5: We can divide our histogram into deciles.
More lessons to come
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Option Pricing: Black- Scholes Made Easy
or with author and developer Jerry Marlow
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