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You're welcome and I'm glad you found the video helpful.

Send me an email (kevinbracker1@gmail.com) requesting the BS Option Pricing Model spreadsheet and take a look at my BS Option Pricing Model spreadsheet (czcams.com/video/i0sGAds8ztI/video.html). I'll get you the spreadsheet.

I agree. Just bought my HP and I've been banging my head trying to work it out. Set at 2dp was seriously bad. What happened to the good old days when you got a manual with every product. Sound like cutting every cost every where, called greed. Thanks Kevin

Okay, that made me LITERALLY LOL. Thanks!

The book should still be available, but I don't know if it is downloadable (it's better in the online format due to embedded youtube videos, etc. anyway). You can find it here -- pressbooks.pub/businessfinanceessentials/. Pressbooks changed their terms right as I retired and it would cost more to make it available to download (it was free and now it would be $400 per year). You can download a copy from here -- digitalcommons.pittstate.edu/oer-business/1/ (Click on download)

You're welcome. I'm always amazed that these videos I developed for my classes got such traction and have been effective for as long as they have.

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Thank you!

Means a lot...Thank you!

I had the same impression, these time I just learned to be approved. But never forgot which it was important.

Volatility refers to the volatility of the underlying stock (or other asset) that the option is based on. For example, if I was buying a call option on TSLA, it would be the volatility of Tesla that I would use. The key though is that it is based on implied volatility (which may be very different than past volatility). There are multiple reasons (including earnings announcements between the time the option is purchased and expires) where implied volatility is your "best guess" as to what the actual volatility will be. That said, it is often close to what it has been over the past few weeks.

Jonas -- Here is a link that discusses convertible bonds and the strike price -- www.fe.training/free-resources/financial-markets/convertible-bond/#:~:text=The%20strike%20price%20is%20the,close%20to%20the%20expiry%20date. The idea is that (like the strike price of a call option on a stock), the convertible strike is based on the difference between the convertible's par value divided by the number of shares which you can exchange the bond for at maturity.

@@kevinbracker Appreciate the response! It makes sense that the conversion price at maturity should be the strike of the option.

The periods per year sets the compounding (that was setting it to 2 Periods per year for semi-annual compounding). In the last segment, we changed it to 12 P/YR to reflect monthly compounding). The 10-year deferral period allowed the $300,000 we paid for the annuity to compound for 10 years (or 20 semi-annual periods) before beginning to calculate the payments). Note that you need to change BOTH the N (N = years time compounding periods per year) and the P/YR to properly get the calculator to adjust).

Not sure if I completely follow the question, but based on my impression, he is buying a 30-year semi-annual cash flow stream with $0 distributed in the first 10 years (earning 5% semi-annually) and then over the last 20 years he receives $X monthly (not clear whether this is compounded monthly or semi-annually). So here is the logic: Solve for the FV of the $300K first ==> Set calc to 2 P/Y, 20 N, 5 I/YR, -300000 PV, 0 PMT and SOLVE for FV ==> $491,584.93 Next, solve for PMT (using 5% compounded monthly) ==> Set calc to 12 P/Y, 240 N, 5 I/YR, -491,584.93 PV, 0 FV and SOLVE for PMT ==> $3,244.24.

You're welcome!

The futures price is to take delivery of the underlying asset at a price locked in today. This can be used for either speculation or hedging.

⁠@@kevinbracker thanks, for the example in the video, I noted that the futures price at expiry is not equal to the spot of fuel (futures price aug is $2.89, spot of fuel is $3.25). Why would that be so…? since futures at expiry would normally be priced at the spot

@@WeiHanCheng You have two "moving" prices (futures prices will adjust to spot prices as the futures gets closer to expiration), so that at the moment of expiration they should be "almost" equal (there might be slight discrepancies based on costs of liquidating the hedge). However, we don't see the prices of each at expiration in this example. More importantly, you are comparing retail prices at the pump to wholesale prices for the actual gasoline which will account for differences due to taxes, profits, etc.