INTRODUCTION TO DERIVATIVES
- Whatβs a derivative?
- Derivatives markets and structure
- Preamble
- Exchange traded derivatives
- Over the counter derivatives
TYPES OF DERIVATIVES
Forward commitments
- Forwards
- Payoff structure
- Delivery of forwards
- Futures
- Standardized contracts
- Price characteristics
- Swaps
- Fixed-rate swap
- Floating-rate swap
TYPES OF DERIVATIVES (Continued)
Contingent claims
- Options
- Call option
- Put option
- American-style
- European-style
- Credit derivatives
- Credit spread options
- Credit-linked note (CLN)
- Credit default swap (CDS)
- Asset backed securities
- Collateralized mortgage obligation (CMOs)
- Collateralized bond obligation (CBOs)
- Collateralized loan obligation (CLOs)
- Collateralized debt obligation (CDOs)
Hybrid derivatives
- Bonds
- Callable bonds
- Convertible bonds
- Swaps
- Swap payments
- Options
- Options on futures
- Swaptions
NATURE OF THE DERIVATIVES UNDERLYING COMPONENT
- Equities
- Fixed income
- Currencies
- Interest rates
- Credit
- Credit default swaps (CDSs)
- Collateralized debt obligations (CDOs)
- Commodities
- Other
PURPOSE AND BENEFITS OF DERIVATIVES
- Risk allocation
- Information discovery
- Operational advantages
- Market efficiency
CRITICISMS AND MISUSES OF DERIVATIVES
- Speculation
- Hedging
- Risk management
ELEMENTARY PRINCIPLES OF DERIVATIVE PRICING
- Derivative values
- Storage and associated costs
- Arbitrage
- The law of one price
- Arbitrage opportunities and their application
