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Applying Options in the Classroom: Selling Calls and Puts on Grades

Journal of Financial Education, Volume 37, Spring/Summer 2011, Number 1, Pages 43-54.

20 Pages Posted: 22 Jul 2014  

Joe Smolira

Belmont University

Denver H. Travis

Saint Joseph's University

Date Written: November 2009

Abstract

Trading simulations have become more common in the finance classroom. One problem with traditional trading simulations is that using play money as currency often creates a situation where the winning strategy is an excessively risky strategy. In this paper, we introduce an options simulation which allows students to buy a call or a put on their final exam score. Because the students pay for the options with an important currency, final exam points, they are required to fully analyze the decision to buy the option since there is a real potential loss in the purchase.

Keywords: Options, Classroom Simulation, Grades

Suggested Citation

Smolira, Joe and Travis, Denver H., Applying Options in the Classroom: Selling Calls and Puts on Grades (November 2009). Journal of Financial Education, Volume 37, Spring/Summer 2011, Number 1, Pages 43-54.. Available at SSRN: https://ssrn.com/abstract=2469408

Joe Smolira

Belmont University ( email )

United States
615-460-6463 (Phone)

HOME PAGE: http://coba.belmont.edu/fac/smoliraj/

Denver Travis (Contact Author)

Saint Joseph's University ( email )

Philadelphia, PA 19131
United States
610-660-1670 (Phone)

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