Excerpt from course description

Options and Futures

Introduction

Due to the remarkable growth in the use of financial derivative instruments, a basic understanding of derivative markets is essential not only to students and specialists in finance, but also to general business practitioners. The objective of this course is to provide students with a basic understanding of the pricing and hedging of options, futures and if time permits of swaps and other structured products. The course is designed around the central concepts of arbitrage, replication and hedging. While the economic reasoning behind these concepts will be strongly emphasized, some emphasis will also be placed on the practical aspects of the use of derivatives as well as the markets in which they are traded. This course would also prepare students for more advanced courses on derivatives.

Course content

  • Introduction to derivatives markets and derivative instruments
  • Basic strategies, insurance, hedging and speculation using options and futures
  • Financial forwards and futures: pricing and hedging
  • Commodity forwards and futures: pricing and cross-hedging
  • Parity and other option price relations
  • Binomial option pricing
  • Black-Scholes option pricing
  • Option Greeks and hedging
  • Interest rate forwards and futures (if time allows)

Disclaimer

This is an excerpt from the complete course description for the course. If you are an active student at BI, you can find the complete course descriptions with information on eg. learning goals, learning process, curriculum and exam at portal.bi.no. We reserve the right to make changes to this description.