Abstract

The current study aims to highlight the role and importance of options contracts as one of the most important types of financial derivatives that are used to reduce or hedge the main risks to which investments in stocks may be exposed normal. The main problem of the study was the lack of the Iraqi stock market to use financial derivatives, foremost of which are options contracts on shares, as one of the most important financial tools that can be used for the purposes of hedging against the price risks to which the shares of companies listed in this market are exposed. In order to prove the hypotheses of the study, a sample consisting of shares of (16) companies was selected from the companies listed in the Iraqi Stock Exchange distributed among the sectors of banks, hotels and services. The Study also covered a period of (12) months that extended from (2021/1/1 up to 2021/12/31), The possibility of using. has been tested Binomial model for one period and two time periods in the pricing of assumed options contracts and in the formation of a portfolio to hedge risks, and the possibility of using this model in the formation of contracts for buying and selling options on the shares of companies that were discussed in this study was tested. The study reached a set of conclusions. However, the most prominent of them are those that emphasized the possibility of employing www Binomial model in the pricing of assumed options and their use in the process of hedging the price risks that the shares of the research sample companies may be exposed to.