In the past 15 years there has been an explosion in the mathematical development of option pricing theory. Everyone and his or her grandmother has written an introductory text, and many of them are good (which must be grandma's influence)!

There is one text that you must own and learn thoroughly
if you are really interested in going on in this
field. It is the standard business school text and practitioner's
bible.
This is John C. Hull, **Options, Futures, and Other Derivatives**,
Prentice-Hall. The current edition is the sixth edition.
There is a copy on reserve for this course in the
**Mathematics Library in the Hill Center**,
and I will indicate sections to read, as we go along. I highly
recommend consulting Hull periodically during the course.

Two other books are on reserve. However, to take them out you must go to the SERC Reading Room in the SERC Building, not the Mathematics Library. These books are

- D. Luenberger,
**Investment Science,**Oxford, 1997. - M. Capinski and T. Zastawniak,
**Mathematics for Finance; An Introduction to Financial Engineering**, Springer Undergraduate Mathematics Series, 2004.

This course should prepare you for
for what is becoming the standard introduction to the higher
level mathematical theory of financial derivatives.
This is the two volume series by Steven Shreve,
**Stochastic Calculus and Finance I: The Binomial Asset Pricing Model**
and **Stochastic Calculus and Finance II: Continuous-time
Finance**,
published by Springer-Verlag in their Mathematics for Finance
series.

- http://www.amex.com This is the web site of the American Stock Exchange, which runs an options exchange. IF you click on ``Options" on the main menu, you will find links to educational material, tutorials, and you will be able to get option price quotes. The site has an excellent dictionary (click on the link at the bottom of the home page) for the definition of many terms and concepts of finance.
- http://www.riskglossary.com This site contains a glossary of the terms and concepts of finance. Many of the entries are extensive and are generally well-written and clear.
- http://www.888options.com This is a site for options education sponsored by the Options Industry Council. One of your early assignments is to read the material provided for the class on Options Basics.