Lecture
This lecture covers the principles of options in corporate finance, including their definition as financial securities whose price depends on another asset, the types of options markets, terminology such as call, put, premium, and exercise price, and the valuation of options using the binomial model. The instructor explains the concept of replicating portfolios, pricing derivatives by arbitrage, and the use of risk-neutral probabilities. The lecture concludes with an example of pricing a call option maturing in the next period.