Options, Futures & Risk Management

This course introduces students to the derivative markets, examining how hedgers, speculators, and arbitrageurs use financial futures, forwards, and options. Applications developed at The University of Adelaide are employed to complement the study of derivative securities and their relationships to various underlying factors. The course then considers the pricing of derivatives and the use of binomial trees to demonstrate no-arbitrage and risk-neutral valuation arguments, as well as the Black-Scholes-Merton approach. There is an emphasis on the use of options and futures strategies for hedging and risk management to achieve interesting payoff patterns.