Equity options valuation trading and practical strategies for resolving
The trading techniques covered are developed from the assumption that the aim of the option market user is to out-perform non-marked suers, by establishing a better risk profile given an equal cash allocation. Business Research Roger Hussey. Define a swap contract and explain how the swap market works.
Understand the organisation of the foreign exchange market. The Upstarts Brad Stone. This performance is achieved by active trade and exposure management. Calculate forward prices for investment assets with and without income.
Discuss the comparative advantage argument in favour of interest rate swaps and explain why it is flawed. There will be two hours of weekly Lectures, a one hour weekly Problem-Solving session and a one hour weekly Drop-in session. Learning outcomes Knowledge and understanding of:
It covers the trading mechanisms used on derivative markets and explains the fundamental principles underlying the pricing of derivative instruments and their use in portfolio management. Explain the delta of an option and demonstrate how it is used in dynamic hedging. Explain the law of one price and purchasing power parity. Explain the difference between futures and forward contracts. Discuss the concepts of foreign exchange risk and cross exchange rates.
Business English Living Language. Discuss the purposes and criticisms of derivative markets. Describe interest rate parity and the main reasons for deviations from interest rate parity. Explain how option prices are affected by the time to expiration, the price of the underlying instrument, volatility and the market rate of interest.
Explain the difference between futures and forward contracts. Define the terms futures price, long position and short position, open interest, price limit, and position limit. Explain the use of a variety of option trading strategies such as short straddles and long butterflies Apply option hedging techniques to simple situations.
Business Studies for Dummies Richard Pettinger. Define futures and forward contracts. Explain the differences between purchasing and writing option contracts. The Behavior Code Nancy Rappaport.
Narrative Generation Ann Badillo. Discuss the comparative advantage argument in favour of interest rate swaps and explain why it is flawed. The multiple choice test and the final exam will contain both numerical and discursive questions and will enable students to demonstrate their knowledge of both derivatives theory and the application of this theory to solve practical problems in risk management and related fields. Perform valuation of a currency swap. Calculate the fair value of a call option contract using the simple binomial option pricing model.
Explain the assumptions underlying the Black—Scholes—Merton option pricing model and their limitations. Perform valuation of an interest rate swap. Explain how option prices are affected by the time to expiration, the price of the underlying instrument, volatility and the market rate of interest. The Rules of Management Richard Templar. Business Research Roger Hussey.