Method for creating and pricing options

Details Method for creating and pricing options Method for creating and pricing options

2007-05-01

2007-05-01

Hamilton, Lalita M. (Department: 3624)

Data processing: financial, business practice, management, or co

Automated electrical financial or business practice or...

Finance

C705S035000

Reexamination Certificate

active

09717055

ABSTRACT:
A preferred embodiment of the subject invention is directed to creation and pricing of an option related to a target zone in a time-price plot. If the price curve against time enters this zone (in a preferred embodiment, a “box”), a fixed amount of money is paid to the owner of the option; if the curve misses the box, there is no payout to the option owner, who also forfeits the premium paid for the option. Software is described that enables an option buyer to easily create and set the parameters of such an option, that computes a premium for the option, and that manages payout and other functions related to the option. The above-described embodiment is a buy-to-hit option. Other embodiments are directed to sell-to-hit, buy-to-miss, and sell-to-miss options.

REFERENCES:
patent: 5884286 (1999-03-01), Daughtery, III
patent: 5999918 (1999-12-01), Williams et al.
patent: 358189759 (1983-11-01), None
Hewitt, Thomas and Igolnikov, Roman, “Option Valuation: Key Issues in Option Pricing”, Balance Sheet: 2000; 8, 4; ABI/INFORM Globl, p. 11.

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