From the course: Derivatives Fundamentals

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Options pricing demonstration using Excel

Options pricing demonstration using Excel

From the course: Derivatives Fundamentals

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Options pricing demonstration using Excel

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- [Instructor] Okay, now let's build a profit and loss or payoff diagram in Excel. We're going to use the following inputs that are in the small table that has scenario one, scenario two, and scenario three. Recall that blue font represents an input, a black font represents a formula or a link to another cell. So we're going to start with opening price. Opening price is the same as starting price, and I'm going to link that to an input cell, which is C11, and I'll use F4 to lock down both the row and the column reference. I'm just going to copy that down so we have a few of them. Our closing price is going to be an input column, so this will be in blue font, and I want the closing price to be in increments of $5. So I'm going to type in zero, but just to speed things up, I'm going to link the next one to the previous, which is zero and add five, and then I can copy this down and we'll make that go up to 100 eventually. The next is quantity. We are going to make sure we link this to…

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