It's a very useful essay for those who are specialising in finance - Explain why it has proved impossible to derive an analytical formula for valuing American Puts, and outline the main techniques that are used to produce approximate valuations for such securities Investing in stock options is a way used by investors to hedge against risk. It is simply because all the investors could lose if the option is not exercised before the expiration rate is just the option price (that is the premium) that he or she has paid
earlier. Call options give the investor the right to buy the underlying stock at the exercise price, X; while the put options give the investor the right to sell the underlying security at X. …
