1. What is an option premium? What is an option's intrinsic value? What other factors, besides intrinsic value, can affect the size of an option premium?
2. What is the Black-Scholes model? Who are the quants? 4.5 How can investors use options to manage risk?
3. Why might someone buy an option on a futures contract derived from an underlying asset rather than buy an option on the underlying asset itself?