The possibility of using derivative contracts (options contracts) and pricing models in the Iraqi banking sector to hedge the risks of stocks

Abstract

The research touched on the possibility of using stock options contracts and pricing models in the Iraqi banking sector to hedge the stock risks for the period (2017-2018) for a sample consisting of (18) private banks listed on the Iraq Stock Exchange, while the aim of the research was to identify the forms used in contracts Stock options as a binomial and black-scholes model, their application and highlighting their role in determining the fair price for stock options contracts, and verification of the main reason for the decline in their share prices, the researcher concluded that there is a difference in options pricing models in the components of each model and their similarity in determining the fair price of the option, in what is the premium That the option grantor receives as a guarantee in the event that the option contract is not executed by its buyers, and that the low prices of the shares of banks in the research sample are due to an increase in their capital and issuance of a large number of their shares in the financial market. The researcher recommended a number of recommendations, including the necessity for the research sample banks to grant stock options contracts to avoid instability in their stock prices and ensure that they do not decrease, as well as working on adopting the Black-Scholes and binomial model in determining the price by banks in the research field when granting options contracts , Because it has proven its accuracy in determining the fair price of the option.