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Today were going to talk about option in corporate finance. We will go through option terminologies, pay-offs, profits. We will discuss put-call parity, Black-Scholes and binomial models. Lastly, we will talk about the applications in corporate finance. There are two types of basic options. One is call option; one is put option. Call option will give you the right to buy underlying assets at a prespecified price we call strike price or exercise price -- depends on what type of option we may have the right to do on or before the expiration date. Put option has the right to sell the stock or assets at strike price on or before expiration date. Option contracting [inaudible] strike price which is the agreed on price when the [inaudible] options. Options give you the rights and the cost. The cost of option is called option premium. That is simply the purchase price of options. You can buy options or sell options. The buyer of the options is in the long position, while the seller, the o