Basic Derivative Products and Markets (DOE501)

Course Objective: Students gain a thorough understanding of options, futures, and other financial instruments. Skills are developed in basic pricing analysis, use of pricing models, and trading and hedging strategies. Students are first introduced to the basic techniques for pricing, hedging, and other analysis. Next, these techniques will be applied through an introduction of hedging strategies. The end goal is to develop skills which the students can apply in derivative markets.

Course Learning Outcomes: The students who succeeded in this course;

• will be able to be familiar with most of the products that they are likely to encounter in financial markets and compare them.
• will be able to have good knowledge of how derivative products work and how they are used
• will be able to explain how derivative instruments are priced and derive some important general results on the relationship between forward and spot prices
• will be able to have a knowledge of how financial institutions hedge their risks when they trade these products.
• will be able to implement strategies formed by derivative instruments in their future career.

Course Content: This course examines the purpose and function of derivative markets and instruments, the evolution and future of derivative markets, market participants, exchange traded versus overthecounter markets (OTC), the suite of exchange traded products, selected OTC products, derivative pricing, risk management with derivatives, trading, arbitrage and speculation with derivatives, the use of derivatives in alternative investing. The course will incorporate theory, practice, and experiential learning and will include team projects.