Course overview
This course introduces students to the derivative markets, examining how hedgers, speculators, and arbitrageurs use financial futures, forwards, and options. The course 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.
- Options Pricing Foundations
- Option Valuation and Strategic Applications
- Futures, Pricing, and Risk Management Applications
Course learning outcomes
- Price options
- Develop appropriate option strategies to hedge or arbitrage
- Price forward and futures contracts
- Determine appropriate hedging and risk management strategies using a mix of underlying and derivative securities.