• Define option and describe the two types of options—call option and put option
• Discuss the call option payoffs and the put option payoff—returns and losses to the buyers and sellers of options
• Describe the range/boundaries of the value of call option
• Enumerate the factors—current share price, exercise price, risk-free rate, time to maturity and price volatility of shares—which determine the worth of a call option
• Explain and illustrate the Black-Scholes Option Pricing Model
