Fuddland

As I mentioned, I’m ploughing through the introductory chapters of The Concepts and Practice of Mathematical Finance in order to be slightly less than completely unprepared for a lunch/meeting with a City worker next week.

I’m finding it an okay read, but there’s a lot of jargon to learn and become comfortable with, so the author tries to make this a bit easier on the reader:

An option to buy is called a call option. An option to sell is called a put option. (The easiest way to remember which is which is that C is close to B for buy in the alphabet.)

Eh? What kind of mnemonic is that? Yes, I always remember the date of the Normandy landing by recalling that my rich Aunt June, born in 1944, has 6 bidets in her mansion, it’s a brilliant aide mémoir…

Controversial learning technique though it may be, I’m going to attempt to remember which option is which by recalling that an option to buy is called a call option, whilst an option to sell is called a put option. Let’s see how far my maverick approach gets me.

#1

clair | 2005 / 04 / 21 – 12:11

How about, an option to sell is called a put option because you’re ‘put’ting it up for sale?

#2

Cathy | 2005 / 04 / 21 – 12:43

My goodness, I actually knew that. To be fair, only because it was the topic of our recent functional programming coursework, but still… :-)

#3

Gordon | 2005 / 04 / 21 – 13:12

How about - an option to sell oranges is called oranges, and option to put apples is called apples.

Just don’t add in bananas to the equation, that’d be gross(ery) ;-)

#4

David | 2005 / 04 / 21 – 13:15

Taxi for Mr Mclean! ;)

Commenting on this post is closed. Thanks to all those who left comments. If you'd still like to say something about this entry, feel free to email me.