Derivative Instruments
Forwards, futures, options, swaps – this course explains the fundamentals of different derivative instruments. Tools used in hedging and speculating strategies are reviewed, as well as ways in which these tools are used by both individual and institutional investors around the world. The course covers futures pricing, the Greeks and the various options positions, and explains the basic structure of plain vanilla swaps and how corporations use swaps to manage their risk. It ends with a discussion of how futures and options are traded and the use of margin.
This curriculum is made up of the following modules:
| Program Level | Basic |
| Prerequisites | This course has no prerequisites. |
| Advance Preparation | No advance preparation required. |
| Recent Revision Date | November 24, 2014 |
| Instructional Delivery Method | QAS Self Study |
| Field of Study | Specialized Knowledge and Applications |
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Duration : 2 hours
- Definitions of forwards and futures
- Spot vs. forward delivery
- Basics of pricing
- Characteristics of forwards
- Characteristics of futures
- Margin
- Cash settlement vs. physical delivery
Duration : 2 hours
- Leveraging investment
- Strategies for investing with options
- Speculating with options
- Limitations of Options
- Writing Puts
- Writing Calls
- Covered vs. Uncovered writing
- Writing covered puts
- Option pricing terminology
- Intrinsic value and the time value of options
- Factors affecting option pricing
- The underlying and the strike price
- Volatility
- Risk free interest rate
- The Greeks
- Other option types
Duration : 1 hours
- Exchanges
- Brokers and dealers
- Auction exchanges
- International option exchanges
- OTC Exchange
- Internet exchanges
- Margin on Futures
Duration : 2 hours
- Interest rate swaps
- Currency swaps
- Interest rate swap pricing
- Swap facilitators