Financial Derivatives

Introduction to Risk Management: (Only theory) · Defining and Managing Risk · Upside and Downside Risks · Commodity Price Risk · Interest Rate Risk · Approaches to Risk Management

Introduction to Derivatives: · Defining Derivatives and Derivative Markets · Spot v/s Derivatives Markets · Forward, Futures, Options, Swaps · Uses of Derivatives

Derivatives Market:

• · International and Indian Derivatives Market · Derivative Exchanges · Trading System and Types of Traders · Trading Process, Online Trading · Clearing and Settlement System · Regulatory Framework of Derivatives Market in India.

Forward Contracts: · Meaning, Purpose, Advantages and Problems · Pricing of Commodity Forward Contracts (Theory and Numerical). · Interest Rate Forwards (Theory and Numerical).

Future Contracts: · Meaning, Difference between Forward and Future · Contracts · Specifications of Future Contracts · Closing the position (Theory and Numerical). · Margins and Marking-to-Market (Theory and Numerical). · Cost of Carry Models (Theory and Numerical). · Price Quotes, Settlement Price, Open Interest · Types of Orders

Hedging, Speculation and Arbitrage using Futures: · Basis Risk. Factors Affecting Basis Risk · Single Stock Futures and Stock Index Futures (Theory and Numerical). · Commodity Futures (Theory and Numerical).

Fundamentals of Options: · Options Issued by Corporations (Introduction) · Meaning of Options Contract, Options Terminologies · Moneyness in Options (ITM, ATM, OTM) (Theory and Numerical). · Factors Affecting Options Premium · Exchange Traded Options

Call and Put Options. (Theory and numerical). Options Trading Strategies: · Uncovered · Covered · Spread · Combination

• · Put-Call Parity: (Theory and Numerical).
• · Risk Free Security · Put-Call Relationship

Binomial Options Pricing Model: (Theory And numerical).

• · Binomial Options Pricing Model for Call and Put Options · Single Period and Two-Period Binomial Options Pricing · Model

Black-Scholes Options Pricing Model: (Theory and Numerical).

• · Stock Price Behavior · Assumptions in Black-Scholes Model · Black-Scholes Model for Pricing Call and Put Options

Greeks in Options (Only Theory):

• · Risks in Options Trading · Characteristics of Options Hedging · Greeks in Options Hedging: Delta, Gamma, Theta, Vega, Rho.

SWAPS (Only Theory):

• · Swaps: Meaning, Types, Terminologies · Forward Swaps · Swaptions · Equity Swaps · Commodity Swaps