Course details
The course gives a step-by-step guide to the products, applications and risks in the derivatives markets. Futures, Options and Swaps will be covered and we will give an insight into the world of the trader. The concept of the “underlying” will be explained; Over the Counter (OTC) and Exchange traded instruments will be considered and we will look at examples and applications. Teaching methodology will include discussions, casework and exercises.
Learning Outcomes
- Examine the differences between the underlying asset, futures, options and swaps
- Explain the features of futures contracts and why they are traded
- Examine the payoff profiles of long and short futures positions
- Examine the different uses of futures from hedging to arbitrage
- Define market jargon and terminology
- Compare futures with other futures-style products such as swaps, ETFs, CFDs and spread bets
- Describe the four basic payoff profiles for option instruments
- Discuss the uses of options for retail and institutional investors
- Identify common option strategies
- Analyse the components of an option’s price
- Describe the motivations behind options trading
- Explain how margining works on derivatives exchanges
Who Should Attend
Individuals wishing to obtain a general understanding of derivative products and an insight into why they are used by the various market participants. New employees and Individuals in support or IT roles will also find this course useful.
Course Content
- The Derivatives Markets
- Background and development of the Derivatives markets
- Definition and key features:
- Options, Swaps and Futures
- Exchange Traded VS Over the counter (OTC) products
- Single VS multiple settlement
- Premium VS non-premium instruments
- Derivatives Volumes
- The concept of the “underlying”
- Forward pricing
- Financial Futures
- Definition and key features
- Open outcry VS screen based trading
- Contract specifications
- Trading and hedging
- Futures Market Structure and Operations
- How a trade is made:
- Trading
- Matching
- Clearing
- Margining: Initial and Variation margins
- Case study
- Overview of Forward Rate Agreements (FRAs)
- Definition and key features
- Implied forward rates
- Comparison between Futures and FRAs
- Applications and examples
- Interest Rate Swaps
- Definition and key features
- Terminology
- Range of swap types: “vanilla” (fixed/floating), basis swaps
- Applications and examples
- Overview of Options
Definition and key features
Terminology
OTC VS Exchange traded products
Options VS forward contracts
Updated on 08 November, 2015Course Location
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