call-option

It is never optimal to early exercise a call option on a non-dividend-paying stock but it may be advisable to early exercise a call on a dividend-paying stock. For a put option, it is maybe optimal to early exercise a put on EITHER a dividend- or non-dividend-paying stock. The primary trade-off...

Hi. In the study notes of the assigned reading "Innovations in Credit Risk Transfer: Implications for Financial Stability" by Darrell Duffie (p.27) says Senior CDO tranche is shorting a call option on cash-flow of underlying collateral, while Junior tranche is effectively long a call...