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Introduction to Option Management

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Statistics of Financial Markets

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Abstract

In this section we consider the fundamental notion of no-arbitrage. An arbitrage opportunity arises if it is possible to make a riskless profit. In an ideal financial market, in which all investors dispose of the same pieces of information and in which all investors can react instantaneously, there should not be any arbitrage opportunity. Since otherwise each investor would try to realize the riskless profit instantaneously. The resulting transactions would change the prices of the involved financial instruments such that the arbitrage opportunity disappears.

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Authors and Affiliations

  1. FB Mathematik, TU Kaiserslautern, Kaiserslautern, Germany

    Jürgen Franke

  2. Ladislaus von Bortkiewicz Chair of Statistics C.A.S.E. Centre for Applied Statistics and Economics School of Business and Economics, Humboldt-Universität zu Berlin, Unter den Linden 6, Berlin, Germany

    Wolfgang Karl Härdle

  3. Sim Kee Boon Institute for Financial Economics, Singapore Management University, Singapore, Singapore

    Wolfgang Karl Härdle

  4. Inst. Statistique, Université Catholique de Louvain, Leuven-la-Neuve, Belgium

    Christian Matthias Hafner

Authors
  1. Jürgen Franke
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  2. Wolfgang Karl Härdle
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  3. Christian Matthias Hafner
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Franke, J., Härdle, W.K., Hafner, C.M. (2015). Introduction to Option Management. In: Statistics of Financial Markets. Universitext. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-54539-9_2

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