- 1. Introduction
- 2. Classification of contracts, and terminology
- 3. Hedging, replication, and arbitrage
- 3.1 Hedging and replication
- 3.2 Arbitrage
- 4. The general valuation framework
- 4.1 Spot price, expected price, and forward price
- 4.2 An asymmetric probability density of the underlying price
- 4.3 The expected value of a contract is zero an analogy with the risk-neutralvaluation approach
- 4.4 Substituting probabilities by prices
- 5. Option pricing with specific functional or distributional assumptions
- 5.0 Pre-Remarks
- 5.1 A constant (Rectangular distribution)
- 5.2 A linear function (Triangular distribution)
- 5.3 A quadratic function (Parabolic distribution)
- 5.4 An exponential function (Negative exponential distribution)
- 5.5 The normal law of error
- 5.6 A comparison with the Black-Scholes model
- a) Normal versus lognormal market price
- b) Deriving the Black-Scholes formula from the Bronzin equation
- c) The Bronzin style Black-Scholes formula
- d) A simple expression (approximation) for at-the-money options
- 5.7 The binomial distribution (Bernoulli theorem)
- 6. Valuation of Repeat-Options (Noch-Geschäfte)
- 7. Option pricing in historical perspective, and an evaluation of Bronzins contribution
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