Derivative Securities

This course is an introductory course on financial derivatives and derivatives-linked investments. The
derivatives covered include forwards, futures, swaps, and options on different underlying assets like
stocks, stock indices, commodities, and foreign exchange. Through this course, students will learn the
features of various derivatives and how to price, value (calculate the Profit/Loss) and structure them
for investment and risk management. Students will also learn basic and slightly more advance option
strategies and how to use them for hedging and trading. They will be able to design arbitrage strategies
to take advantage of mispricing in various derivatives.
A good understanding of derivatives and its usage/abuses is a prerequisite for effective management of
any company as financial risks can cause substantial damage to the P/L of an otherwise well managed
firm. Graduates with solid grounding in derivative investments can take up careers as traders,
derivatives specialists/advisors, derivatives sales experts, financial engineers and risk managers in
treasury departments, trading floors, asset management and risk management divisions in banks and
major corporates. On an individual level, understanding of derivatives will help one to appreciate the
risk and rewards in the many derivatives-linked investments now increasingly made available to retail
investors.