Course overview
This course examines the function and operation of derivative markets in finance. It begins by identifying the relationships that must hold in these markets to prevent arbitrage opportunities. The course then covers options pricing using the Binomial and Black-Scholes models and describes a wide range of futures and options strategies, along with their applications to hedging and risk management. It also considers currency and fixed-interest derivatives, as well as options on futures and various exotic options.
Course learning outcomes
- Apply fundamental futures concepts to the pricing of futures and forward contracts
- Interpret and analyse market data for a combination of underlying and derivative securities to develop appropriate hedging and risk management strategies
- Apply stock price dynamics and hedge parameters to determine option prices
- Develop suitable hedging and arbitrage strategies using derivative securities