Peer Review

The Call Option Game as an interactive simulation is well written and designed. Technical investment terms are effectively explained and if needed, participants are provided with an illustrative trading example prior to playing the call option investment game. In addition, effective help windows are provided once the game is activated. During the simulation, the use of portfolio backgrounds, news flashes, and graphics are very engaging forcing participants to simulate real-world investment decisions. At the conclusion of the simulation, evaluation comments create effective feedback concerning relationships among call option values, portfolio values, investment risk, and stock price changes.

The module begins with the statement, ?Options are usually sold in sets of 100.? However, this is not true. Actually a single option gives the right to buy 100 shares. This explanation is provided in the parenthetical elaboration following the inaccurate statement. The background information on the companies seems hard to reconcile. The higher growth stock with the higher P/E ratio has a flat stock
price history. The lower growth stock with the lower P/E ratio has a rising stock history. The reverse would seem more plausible, however, this is not critical to the simulation.The News Flashes do not give enough information to be really useful in affecting an options' trading strategy. For example, one News Flash relates that the company involved was bought by another one but does not specify the price. As a result, partiacipants are unable to anticipate the effect on the stock price or the call option price.The information given does not lend itself well to producing an understanding of why stock prices and call option prices change, just the numerical relationship between the two prices.

The Call Option Game encourages the use of critical thinking skills. During the simulation, the use of portfolio backgrounds for diverse companies, news flashes, and graphics are very engaging, compelling participants to simulate real-world investment decisions. If participants take this exercise seriously and read, analyze, and evaluate all data interfaces and relationships, students sould improve their performance exponentially in subsequent games. The relationships among call option values, portfolio values, investment risk, news media content and stock price changes is interesting, challenging and very educational. The module is especially effective at showing the mathematical relationship between stock prices and call option prices, demonstrating payoff calculations, and indicating leverage, showing the possibilities of really extreme returns, both negative and positive. Hyperlinks to other educational sites that encourage further research into the investment arena such as the Chicago Board of Trade and New York Stock Exhange are also included.

Although information about a company's background as well as news flashes are provided, they are somewhat sketchy. Nothing exists in the module to explain the relationship between the information provided and the impact on the stock prices or call option
prices. Even prerequisite knowledge about such relationships would not make the information provided particularly helpful. The fact that the stock prices and the exercise prices of the options are quoted in dollars per share while the option premium prices are quoted in dollars per contract can be confusing and is unconventional. Finally, The Call Option Game would be improved had more relavent information been provided in the portfolio and news flash sections, such as incorporating a simulated web site with a database and a search engine to further encourage critical thinking skills.

The Call Option Game is highly interactive, very user friendly, and extremely attractive in terms of instructional design. The module is easy to navigate( with the exception noted below), it is engaging, and it is very entertaining. Sound clips from the exhange floor during an active trading session have effectively been incorporated. The use of the blue and green colosr throughout the simulation has the effect of relaxing participants in stressful situations.

Backing up was difficult. Often the whole game restarted or went to some other starting page. Stock prices were quoted in dollars per share, the exercise prices of the options were quoted in dollars per share, but the option premium prices were quoted in dollars per contract. This is confusing and unconventional. It would be better to express the option premium prices also in dollars per
share. Clicking on the Book Value and P/E Ratio hyperlinks created hard to read explanations that overlapped the Portfolio Text interface. Finally, linking to the Chicago Board of Trade web site forces participants out of the game.