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Futures and Options (Workbook)


Description: This new five-module workbook is designed to give the reader a good intuitive understanding of futures and options. Modules One and Two introduce derivatives and illustrate their role in risk reduction.

Readers will see from many illustrations, the role that futures have in speculating and risk reduction.

The books will give practical guidance on how to take positions whilst limiting the risk involved. Practical case studies will allow the reader to understand the applications whilst appreciating the dangers of derivative transactions.

Module Three Four and Five concentrate on options. Module Three introduces the types of options available and their uses. Readers will be able to see payoff profiles and will gain a good understanding of how options are used as a means of taking positions or reducing risk. Valuation models, their relevance and limitations are discussed and finally, more advanced option strategies are discussed.

Author/Editor: Butler, Cormac

Book Type: Paperback


Contents: Module 1: Futures Overview
Preface
Overview of futures
Forward transactions
Forward contracts vs. future contracts
Equity futures
Margining system
Case study: commodity futures
Answer to exercises

Module 2: Bond Futures
Preface
Futures on bonds
Bond valuation and conversion factors
Conversion factor and arbitrage
Basis risk
Duration and convexity
Interest-rate sensitivity analysis
Case study: asset and liability management in a building society
Answer to exercises

Module 3: Introduction to the Options Markets
Preface
Overview of options
Option pay-off profile
Types of options
Option trading strategies
Option risk
Case study: market makers
Answers to exercises

Module 4:Option Valuation Techniques
Preface
Overview of option pricing techniques
Pricing options intuitively
Present value conventions in option pricing
Coping with volatility in option pricing
Delta of an option
Black-Scholes option pricing
Binomial pricing model
Answers to exercises
Normal distribution tables

Module 5: Option Trading and Hedging Strategies
Preface
Put-call parity
The Greeks
Realised and implied volatility
Advanced volatility
Case study
Volatility trade
Answers to exercises
Volatility forecasting
Glossary of terms




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