closing price vs. adjusted closing price 
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When we download daily data from Yahoo!finance, we have the 
following format:

Date,Open,High,Low,Close,Volume,Adj.Close
2017-03-09,179.149994,179.25,175.880005,177.179993,5413100,177.179993
2017-03-08,180.75,180.949997,179.300003,179.449997,3520000,179.449997
2017-03-07,180.710007,181.289993,180.199997,180.380005,2930800,180.380005
2017-03-06,179.720001,180.990005,179.570007,180.470001,3180900,180.470001

There are two closing price: close and adjusted close. 

The close is the observed closing price while the adj.Close is the 
   adjusted closing price which considering stock split, dividend 
   and other distributions. 

To estimate our returns, we have to use the adjusted close. 

 Here is an example. Assume that there is no information or no trading. 
 John bought one share at $10. At the end of his investing horizon, he sold it at $10. 
   $10                                 $10
   |------------------------------------|
   0                                    1

 His return is zero since (10-10)/10 = 0

 Assume that the company announced a 2-for-1 split

   $10                                 $5
   |------------------------------------|
   0                                    1

  What is John's return?
        Still zero since (2*5-10)/10=0

  What happen if we use closing price to estimate 
        instead of the adjusted close?

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use Fama-French market and risk-free rate 
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 Step 1: go to Prof. French Data Library
          
 Step 2: find data set 

 Step 3: download 

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Option is a zero-sum game
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There are two sides of the transaction: buyer and seller

 An option buyer pays to have a right,
   while the option seller receives cash flow to bear an obligation 

  In terms of final payoff or profit/loss:

     Zero-sum gain: if buyer loses then seller wins. 

                    if buyer wins then seller loses. 

    payoff (seller)      = - payoff(buyer)

    profit/loss (seller) = - profit/loss(buyer)

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