Option pricing models and an example application

Although ?options, one of the most important and widespread derivative instruments, basic function is hedging, they are also used with the aims of speculation, investment and arbitrage. Therefore options have reached quite large transaction volume. Paralel with the increasing importance of options in the world markets, in order to satisfy the need of true value of an option many option pricing techniques have been developed in the literature.Turkey does not have any instutional exchange like İstanbul Stock Exchange to trade options although options carry substantial importance in the world. However, futures trading can be made in İzmir Futures and Options Exchange that has been establish in 2001, and it has been stated that studies have started in order to be able to trade option contracts in İzmir Futures and Option Exchange. That is, in the near future financial markets in Turkey will be able to make options trading, and option pricing methods will gain importance gradually.This study examines functioning, pricing issues involving the option contracts; furthermore, we have tested how the purchasers and sellers are affected especially during the times of crises and afterwards from option transactions, and reached to various results.Key Words: Derivative İnstruments, Option, Option Pricing Models, Risk.