1. Explain different option valuation methods. Use the different valuation methods to value a specific option. Differentiate the intrinsic and extrinsic valuations of the option and explain how they evaluate what the different extrinsic factors are telling you about the value of the option.
2. Evaluate options as a part of a diversified portfolio. Include an explanation of how options can be used as a tool to enhance returns and how a portfolio manager can manage risks tied to option trading.